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Your options when creditors threaten wage garnishment

Any setback can create chaos with your budget. The loss of a job, a divorce, a medical crisis or a home repair emergency are just a few common examples of events that can wipe out your savings and leave your credit overextended. For some, rebounding is just a matter of time. Others fall hopelessly behind and must face the onslaught of creditors calling and sending letters demanding payment.

If you are in this situation, you may worry how far a creditor can go to collect the debt from you. Receiving notice that a creditor intends to garnish your wages can be frightening and unsettling. After all, your wages may barely cover your living expenses, and losing them may be devastating for your family.

Can they do that?

Wage garnishment requires your employer to send a percentage of your pay to your creditor instead of including it on your check. However, it is not that easy, and you will not suddenly receive a paycheck with an unusually low total. You will likely get warnings in the mail that your creditor intends to sue you for payment. A creditor must then file a claim in California court, and the court must approve the garnishment. The exception to this is tax debt, which does not require a court order.

You may also be relieved to know that the government limits the amount a creditor may garnish from your check, for example:

  • Garnishment lasts only until you repay your debt, but filing for bankruptcy immediately stops any garnishment.
  • Garnishment may not take more than 25 percent of your disposable earnings.
  • A judge can only approve a garnishment of your disposable income amount above 30 times the federal minimum wage.
  • Courts place limits of 15 percent of your disposable income for student loans and most other federal debt, such as taxes.

Child and spousal support debts are the exception, and the court can order up to 60 percent of your gross income withheld to pay delinquent support. If your support debt is older than 12 weeks, the court may add an extra 5 percent to your garnishment. Child and spousal support debts are also ineligible for discharge in bankruptcy. However, this does not mean you have no alternatives. Seeking legal advice when debt becomes overwhelming may introduce you to options that are appropriate for your circumstances.

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