Garnishment - Explained
What is Garnishment?
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What is Garnishment?
Garnishment is a legal process, where through a court judgment, a third party (employer) is instructed to directly deduct some payment from the defendants (debtor) salary or bank account. The payment is usually deducted to settle the money that the defendant owes the complainant (the creditor). In other words, garnishment is a process where the employer through a court order, takes part of the defendants money and pays the complainant. Note that when it comes to garnishment, it is the third party (employer or garnishee) who makes the payment to the complainant, on behalf of the defendant.
How Does Garnishment Work?
Garnishment happens when a defendant defaults to pay the money he or she owes the complainant. When this happens, the complainant may seek the courts intervention to help collect the pending payment through the defendants employer. The court will, therefore, direct the employer to retain a given amount of money from the defendants wages to pay the outstanding complainants debt. This process is what is called garnishment. Note that garnishment is only valid when a complainant has a court order that shows that a defendant truly owes him or her money and has defaulted to settle the payment. This process is usually the final resort that a complainant can use to claim the money which the defendant owes him or her. Though there are different types of garnishment, wage garnishment is the most common type of garnishment that a court may issue. When wage garnishment is issued, it lasts until that time when the debt is completely settled. Note that wage garnishment may be issued for any type of debt. However, when it comes to garnishment, there is the Consumer Credit Protection Act that limits the amount that can be deducted from personal salaries or wages. For instance, the percentage that the federal agencies are allowed to deduct from someone's wage is 15%. On the other hand, the education department is allowed to garnish up to 10% of the defendants wages in case of student loan default. Also, in case of pending child support payments, the deduction can be done up to 60%. Take note that the 60% deduction applies only if the defendant has no other children to support. In case there are other dependents, then the percentage will be below 60%. A percentage that will be allocated here will now depend on the number of other dependents. Generally, these deductions are done on disposable individual income. Disposable income here means an individuals gross salary after deducting legal requirements such as state, social security, federal, and other mandatory local taxes.
How Garnishment Works (Example)
Generally, most garnishment usually affects the defendants wages. A court may effect garnishment to pay child support, pay back taxes, pay student loans, and so on. Below is an example of how garnishment works. Lets assume that Erickson for unknown reasons stops paying child support to his divorced wife Susan. For this reason, Susan decides to take Erickson to court for the child support money that he owes her. The court then issues a garnishment where a portion of Ericksons salary is automatically deducted by his employer and given directly to his ex-wife Susan so that she can use it to support the child.
Circumstances that may Prompt the Court to Issue a Garnishment
There are various situations that may prompt a court to issue a garnishment against a defendant. Below is a list of situations under which garnishment can be issued:
- Pending child support payment
- Defaulted Student loans
- Pending tax payment
- Outstanding credit card/bank loans
- Medical bills that haven't been paid
Income that can be Garnished
Garnishment can be applied on different sources of income. Under the law, the court is allowed to issue garnish on the following sources of income:
- Pensions income
- Retirement plans distributions
Income Exempted from Garnishment
Nonetheless, there are certain exemptions when it comes to certain sources of income. There are limits set by law which prohibits garnishment on particular income. For example, the law does not allow the court to issue garnishment on the following sources of income:
- Welfare (Voluntary wage collections)
- Social security income
- Bankruptcy orders
- Veteran benefits
- Workers compensation
- Child support payments
Note that under the Consumer Credit Protection Act, a garnishment cannot be issued to an unemployed person. In addition, employers are also prohibited from dismissing employees simply because their wages are under garnishment. Though the above sources of income are exempted from garnishment, some can still be seized the moment they are credited to your account. Such include social security as well as veteran benefits.
How to Handle a Garnishment Judgment
Generally, a garnishment can destroy your credit rating. Therefore, it is something that you may want to avoid at all cost. However, there is a possibility that you may find yourself is this kind of a situation. Below are some ways of handling garnishment just in case you become a victim:
Reach out to Creditor for a different payment deal A conversation with your creditor can be a way out of this. Talk to the creditor and come to an agreement on how to settle the pending payments. Most creditors are always flexible and can offer you an affordable payment deal.
Accepting the Garnishment Another way out is to simply settle the garnishment as per the court judgment. You can opt to make the payment in installments or explore other options of getting money and pay the debt in a lump sum.
Challenging the garnishment In cases where you strongly believe that the garnishment was issued by mistake, you can as well go to court to challenge the ruling. This should be done immediately before the employer begins making the deduction.
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