Loan 365

Creditors use various means to collect on debts. Some threaten lawsuits and acquire judgments against a debtor. But when unable to collect funds, creditors can request a court order to take unpaid funds from a debtor’s paycheck. Garnishments involve employers; and if a creditor successfully garnishes a paycheck, employers must withhold a percentage of pay, and then send this money to the creditor. Some states do not allow garnishments by creditors. However, these states do permit garnishments if you owe money to the federal or state government (for example: federal student loan, alimony, child support, state/federal taxes.)

The amount garnished from a paycheck depends on the type of debt. For example, the court can garnish 50 percent of pay for past due child support or alimony payments. But on average, creditors can only garnish 25 percent of pay, according to Nolo.com. This provision lets debtors maintain a larger percentage of their earnings (75 percent of pay), in order to afford basic living expenses. Once creditors receive full repayment, they cease garnishing wages and debtors receive their full pay again.

Economic hardship can arise from a wage garnishment. While garnishments let debtors keep a greater percentage of income, some people cannot make a living after losing 25 percent of pay. The court takes these individuals into consideration; and once receiving a paycheck after a garnishment, debtors can file a Claim of Exemption with the court. Go to the court yourself and request a form from the clerk’s office. Filing this claim doesn’t immediately stop a garnishment. Rather, debtors receive a hearing date to discuss economic hardship and request removal of a garnishment order.

The decision to remove a wage garnishment is made only after a judge reviews evidence of economic hardship. Come to court prepared to prove your claim. The judge will make a decision based on how much you pay for housing, household utilities, debt payments, food and other monthly expenses. Documented proof of income is also necessary to determine if you qualify for garnishment removal due to hardship. Bring copies of your utility bills, other bill statements (car, mortgage, credit cards) and paycheck stubs.