How To Protect Yourself From Wage Garnishment
Many individuals in Rome, GA, can find themselves in financial turmoil. They struggle to make ends meet while creditors take a part of their hard-earned wages. There are many ways to stop wage garnishment, and exploring bankruptcy might be an option for you.
Quick Summary:
- Wage garnishment is a legal procedure where a court order directs your employer to keep a specific amount from your paycheck to repay a debt.
- Federal law, including the Consumer Credit Protection Act (CCPA), limits the amount of wages that can be garnished. Some states, like Georgia, have more protections for debtors facing wage garnishment.
- Filing for bankruptcy can stop wage garnishment through an automatic stay. That provides immediate relief to debtors.
- Chapter 7 and Chapter 13 bankruptcy are two main options for individuals. Each of them has its implications for wage garnishment and debt relief.
- While the automatic stay typically stops most wage garnishments, exceptions exist for certain types of debts. Examples are child support, tax obligations, government debts, and student loans.
What is Wage Garnishment?
Wage garnishment is a legal procedure where a court order directs your employer to withhold a specific amount from your paycheck. This amount is sent directly to a creditor to whom you owe money. That happens after a creditor has already obtained a judgment against you for the unpaid debt through the court system.
There are various reasons why a wage garnishment might be issued. Common examples include:
- Unpaid credit card debt
- Medical bills
- Past-due rent
- Child support or alimony payments
- Student loans (in some cases)
Federal law limits the amount of your wages that can be garnished for most debts.
- Consumer Credit Protection Act (CCPA) Protection: This act protects a part of your income from garnishment.
- Garnishment Amount: The amount withheld is limited to the lesser of two figures:
- 25% of your disposable income: That is your gross pay minus mandatory deductions like taxes and social security.
- Amount exceeding 30 times the federal minimum wage: This amount is currently $217.50 (based on a $7.25 minimum wage).
Disposable earnings are defined as the wages left after legally required deductions, such as taxes and Social Security, have been made.
In Georgia, there are practices that debt collection agencies are not allowed to do. That includes garnishing your wages or taking your home or possessions without a court judgment. There is, however, an exception for federally guaranteed student loans that are in default.
What is Exempt from Garnishment in Georgia?
While most wages and bank accounts are vulnerable to garnishment for unpaid debts, certain types of funds receive federal protection. Here’s a breakdown of some exempt income sources:
Social Security, Disability, and Retirement Benefits
These benefits are generally exempt from garnishment with a few exceptions. You can still lose these benefits if you owe federal student loans, child support, or unpaid federal taxes.
State Benefits
This category typically includes unemployment compensation, welfare benefits, and VA benefits. However, similar to Social Security, exemptions may not apply if you owe child support or back taxes.
Student Loans
Federal student loans are generally protected from garnishment in most debt collection cases.
Child Support Payments
Importantly, child support payments you receive cannot be garnished by creditors. However, if you owe past-due child support, your wages or other income sources may be vulnerable to garnishment to recover the owed amount.
How Does Bankruptcy Affect Wage Garnishment?
Filing for bankruptcy can be a powerful tool to stop wage garnishment. When you file for bankruptcy, a court order called an “automatic stay” goes into effect.
An automatic stay is a legal provision that goes into effect upon filing a bankruptcy petition. It provides immediate relief to debtors by stopping most collection actions by creditors. That includes wage garnishment, foreclosure, repossession, and debt collection lawsuits. During the automatic stay, creditors cannot contact the debtor or attempt to collect on debts. They are only allowed during bankruptcy proceedings.Â
There are two main types of bankruptcy for individuals: Chapter 7 and Chapter 13.
Chapter 7 Bankruptcy
This chapter allows for the discharge of most unsecured debts. Examples include credit card debt and medical bills. In some cases, wage garnishments for these types of debts can be stopped through Chapter 7. But note that this may not be suitable for everyone, and some assets might be subject to liquidation to pay creditors.
Chapter 13 Bankruptcy
This chapter involves creating a repayment plan that lasts for three to five years. During this time, you will make monthly payments to a court-appointed trustee, who will then distribute the funds to your creditors. Wage garnishments are typically halted while you’re making Chapter 13 plan payments.
Knowing which type of bankruptcy is right for you is crucial. Factors like your income, assets, and the amount of debt you owe will all play a role in deciding between Chapter 7 and Chapter 13.
Does Automatic Stay Stop All Wage Garnishment?
The automatic stay typically stops most wage garnishments. However, there are some exceptions to this rule. Certain types of debts may not be affected by the automatic stay and can continue to be garnished during bankruptcy proceedings.
- Child Support and Alimony: Child support and alimony obligations continue during bankruptcy proceedings. Wage garnishment for these purposes may continue.
- Certain Tax Debts: Some tax obligations, such as certain income taxes and property taxes, may continue. But, the specifics can vary depending on the circumstances and the type of tax debt involved.
- Government Debts: Debts owed to government agencies are not covered under automatic stay. Examples such as fines, penalties, or overpayments of government benefits. Wage garnishment for these types of debts may continue during bankruptcy.
- Student Loans: Automatic stay does not usually stop wage garnishment for student loan debt. There are other ways to handle student debt under bankruptcy.
How Can a Bankruptcy Lawyer Help Me Stop Wage Garnishment?
Wage garnishment can cripple your finances. While bankruptcy offers debt relief, it doesn’t stop garnishment for all debts. Here’s how a bankruptcy lawyer can help:
- Analyze your situation: They’ll assess the garnished debt and court order to see if Chapter 7 or 13 can halt it.
- Identify exemptions: Federal law protects some income. They’ll see if your wages qualify.
- Challenge the order: In some cases, the order might be faulty. They can challenge its validity in court.
- Automatic stay: Filing for Chapter 7 or 13 triggers a temporary pause on garnishment, giving you breathing room.
- Negotiate with creditors: They might be able to negotiate a settlement that eliminates garnishment.
Call Our Trusted Bankruptcy Lawyers Today!
If you’re facing wage garnishment in Rome, GA, don’t despair. Bankruptcy can provide a path to financial freedom and relief from creditor harassment.
You can navigate bankruptcy confidently with the help of a competent bankruptcy attorney. The Law Office of Jeffrey B. Kelly will provide a knowledgeable advocate who will stay by your side.
Take control of your financial future today and stop wage garnishment for good. Get a free consultation today!