Can You Be Dismissed From a Job Because of Wage Garnishment?
If a person has unpaid bills, a creditor may seek remedy through the courts by filing a lawsuit and obtaining a judgment against the person. The judgment may allow the creditor to garnish, or take, a percentage of the person's wages. Federal law dictates when an employee can be dismissed from a job due to wage garnishment.
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The Law
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Wage garnishment requires an employer to withhold a specific sum from an employee's pay in compliance with a court order or under directive from another requesting authority, such as the Internal Revenue Service. The employer must turn those monies over to the creditor who has had the person's wages garnished. Title III of the Consumer Credit Protection Act prohibits an employer from terminating an employee due to wage garnishment based upon a single debt, regardless of how many times a wage garnishment is levied in an attempt to collect on that one debt.
Considerations
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Title III will not protect employees from termination in all wage-garnishment situations. After the first wage garnishment, a subsequent request for wage garnishments based upon a different debt can lead to job loss. Federal law does not prohibit the employer from terminating an employee due to wage garnishments that result from second or subsequent debts. Additional wage garnishments add an extra layer of work for the employer and that is a responsibility the employer may not want to take on.
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Consequences
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A wage garnishment is a public record and it will appear on your credit report as such. Public records have an adverse impact on your FICO credit score, according to myFICO. If you are terminated from your job due to multiple wage garnishments, keep in mind that many employers perform credit checks as part of the hiring process. If your credit is damaged due to the presence of wage garnishments, this may prevent a prospective new employer from hiring you.
Prevention/Solution
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According to the Federal Trade Commission, if you have a lot of debt, you should contact your creditors as soon as possible and inform them of your financial situation. Try to make payment arrangements with the creditor directly. This may prevent the creditor from suing you or seeking a wage garnishment. If you can proactively address the debt that you owe, you may be able to keep your employer out of the process altogether and avoid jeopardizing your employment.
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