Wage garnishment is a legitimate way for creditors who have obtained a judgment against you to collect the debt you owe. In order for the creditor to get a judgment, a lawsuit must be filed and you must be served with legal process which gives you notice of your opportunity to contest the creditor’s claim. Don’t ignore legal papers you receive. Contact a lawyer for advice. Failure to timely respond in writing by filing an Answer with the Court with appropriate denials could result in allowing the creditor to obtain a default judgment which will cut off your right to contest the validity of the debt and the amount claimed.
The creditor with a judgment can request the Court issue a Writ of Garnishment which is served on someone who owes you money. The most obvious garnishees are your employer and your bank or credit union. There are laws which must be followed in the process of executing a garnishment and you should consult a lawyer to determine if the creditor has followed the process. You have the opportunity to object to the garnishment for reasons which include failure to follow due process and to limit the garnishment to non-exempt assets. Wage garnishments are limited to 25% of your net paycheck. Garnishments of non-earnings owed to you are not so limited. Garnishment of a bank account which does not contain exclusively Social Security benefits or Worker’s Compensation benefits are only limited to that amount over $150 belonging to the debtor. A garnishment of your bank account can result in the loss of all of your money above $150.
Bankruptcy will stop the creditor from getting your money but in some cases the trustee in bankruptcy may be able to keep the money for the benefit of all of your creditors. So, if you know that a creditor has a judgment against you, consult a bankruptcy lawyer immediately so that the bankruptcy can be filed before the Writ of Garnishment is served on your bank or your employer. After the garnishment is served on your bank, the bank will withhold your money (freeze your account) and wait for the time to pass during which the law allows you to file an objection. If you fail to file an objection and request a hearing before the Court within the time allowed, the bank will release the money which is not exempt to the creditor.
Wage garnishments are limited to 25% of your net paycheck for all wages owed up to the date the Writ of Garnishment was served on your employer. There is an exemption in favor of the debtor for 75% of the debtor’s net earnings. If you file bankruptcy, any wages earned after the date of filing bankruptcy must be returned to you.