Receiving your paycheck from your employer and noticing a 25 percent decrease in pay can wreck havoc on your personal finances. Losing wages from a garnishment can follow nonpayment of a debt to a creditor. But while creditors can take up to 25 percent of your pay, garnishing wages requires following a specific process.
What is a Garnishment?
Creditors can receive unpaid debts using various methods. Some hire collection agencies or place liens on bank accounts, while others may use a wage garnishment and take money directly from a debtor's paycheck. A wage garnishment involves creditors sending a request to your employer to withhold up to 25 percent from your paycheck -- after federal, state and Social Security withholdings. Creditors acquire withheld funds and apply these funds to unpaid balances.
Creditors have to take specific steps to acquire a wage garnishment against a debtor. The first step involves filing a lawsuit with the court and scheduling a hearing. Debtors can attend this hearing before a judge to dispute a debt. At the end of the hearing a judge makes a ruling, and if a debtor legitimately owes money to the creditor, the judgment ends up on her credit reports. Judgments indicate that a debtor owes money to the creditor, and he has 30 days to satisfy this debt.
Unpaid Judgments and Garnishments
The courts give debtors ample time to satisify a judgment or setup an installment pay plan with creditors. If this doesn't occur, creditors can take further steps to execute a judgment. A creditor gets permission from the courts to begin a wage garnishment. A sheriff delivers papers to the employer notifying the company of the garnishment, and debtor's also receive notification from the creditor. Creditors cannot garnish wages without notifying the debtor first. Creditors must send debtors a written notification or warning at least 30 days before garnishing wages. If a garnishment results from unpaid taxes, the IRS mails a Final Notice and gives debtors 30 days to respond before garnishing wages.
Stopping Wage Garnishment
Notification of an impending garnishment may move a debtor to action. Debtors can stop a garnishment by simply communicating with the creditor and discussing options for resolving or satisfying the unpaid judgment. Options for remedying the debt include making a full payment to the creditor or sending monthly installment payments until the debt is paid.
Administrative Wage Garnishments
In regard to student loans, the Department of Education must give you timely notice of its intent to garnish your wages. You may request a hearing within 30 days of receipt. However, the Department does not have to get a court order.