If you’ve found yourself in a tough financial situation, having money withheld from your paycheck may be the last thing you want.
Wage garnishment is when a creditor gets permission from the courts to have money withheld from your paycheck, or withdrawn from your bank account, in order to pay off your debt.
If you’re concerned about your wages being garnished, you need to act quickly. Why the rush? Once wages have been withheld from your paycheck you probably won’t be able to recover the money. So it’s best to look into alternatives, like filing a Transverse of Garnishment, settling the debt in a lump sum payment, or possibly filing bankruptcy, before the money starts disappearing.
Filing Bankruptcy to Stop Wage Garnishment
One of the effects of filing bankruptcy, either Chapter 13 or Chapter 7, is that all actions to collect a debt are immediately halted. This is called an “automatic stay.” So if you’re able to move quickly you may be able to avoid having funds withheld from your paycheck or removed from your bank account (a bank levy).
If the garnishment order has already been served to your employer you may need to inform your payroll manager that you have filed bankruptcy to stop the garnishment.
If you are able to file Chapter 7 bankruptcy, you may find true debt relief.
The FI FA Trap
Too often, those who have found refuge in filing bankruptcy later find themselves plunged back under water when they go to sell their house or car. That’s because one of their creditors was granted a Fi Fa before they filed for bankruptcy.
A Fi Fa (writ of fieri facias) essentially places a lien on your property that comes into play only if try you sell it.
So let’s say that five years ago your debts were discharged through a Chapter 13 or Chapter 7 bankruptcy. You’ve worked hard, rebuilt your savings, and re-established your credit. Now the market is hot and you want to sell your home. But when you go to sell it you learn that $20,000 of your proceeds will go to the creditor.
Suddenly you find that the creditors bankruptcy protected you from are coming after you once again.
If you have fallen hopelessly behind you can avoid this costly trap by moving quickly to file bankruptcy.
The act of filing for bankruptcy prevents creditors from filing for a FiFa, or even contacting you. But again, if they are granted the action first your protection under bankruptcy is diminished.
Filing a Traverse of Garnishment
If you believe that you have a legal reason to not have your wages garnished you can file a Traverse of Garnishment.
Although it’s not common, a traverse might be successful if:
- The bank account being garnished doesn’t belong to you
- The bank account is joint account, and the funds can be proved to belong to the other owner
- The bank account funds are from social security income that is exempt
- You were never served notice of the garnishment
You should keep in mind that your wages will continue to be garnished while the Traverse is being considered.
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How Garnishment Works
Wage garnishment starts when someone you’ve borrowed money from files a lawsuit claiming that you have failed to pay.
In Georgia, this is most often in a Magistrate court. In Sandy Springs, for instance, if the amount in question is less than $15,000 a judge in the Fulton County Magistrate Court will decide whether the claim is true. In Marietta, the garnishment case would be filed in the Cobb County Magistrate Court.
If you are found to owe money to the creditor, they can begin garnishing your wages. If the garnishment or bank levy is approved one of two things will happen:
- You employer will be ordered to withhold a percentage of your income, or
- Your bank will be ordered to transfer to withdraw and hold an amount from your bank account.
For a fuller understanding of the process you may want to watch this brief video produced by Fulton County Magistrate’s Court Visual Information Center.
The Limitations of Garnishment in Georgia
You may already know how garnishment works but there are a few specifics that it is important to keep in mind.
In Georgia, wage garnishment usually lasts for a period of six months, or until the amount you owe is paid in full.
- The amount of money withheld can’t be more than 25% of your paycheck
- But after garnishment, the amount left must be 30 times the minimum wage
Who Can Garnish Wages?
Most any creditor can file a lawsuit to collect money owed. But in order to garnish wages they must receive a judgement in their favor and a court order.
Certain creditors, however, can bypass the courts. If you owe money for a government-backed student loan, unpaid child support or alimony, or back taxes, the creditors involved can fast-track an action to withhold money from your paycheck or withdraw it from your bank account.
Is Everything I Own Subject to Garnishment?
Most of the time garnishment actions recover the amount owed through wages or a bank levy.
But really anything you own and have in your possession when the summons is served, and anything you come into after that, is subject to garnishment.
But some income can’t be garnished. For more information read this: http://law.ga.gov/garnishment-exemption.
Can I Be Fired for Having My Wages Garnished
In general, employers don’t like to have to deal with garnishment because it’s extra work and gets in the middle of your business.
But can they fire you? The first time, no. Your employer can’t terminate your employment the first time they have to comply with a wage garnishment order.
But the law says nothing about repeated garnishment orders, so it will depend on the kindness of your employer.
Can They Take My Social Security?
Maybe. If you owe money for specified debts, creditors might be able to garnish your Social Security benefits or SSDI. Those debts include:
- Federally funded home loans or student loans
- Court-ordered restitution
- Child support
- Back taxes
If you’ve found yourself unable to pay your debts or facing having your paycheck garnished, you need an experienced bankruptcy attorney to steer you in the right direction. Give Craig a call today to discuss your options.