This financial crisis is deepening every day, and we need to find more than one way to combat this menace. Of course most of us are delinquent on many bills, including homes and other credit card payments. What can be done? Your income has been reduced, and it is not going up? You used to take pride in yourself by timely paying your creditors, and now because of things out of control and this omnipresent economic depression, you are behind on many payments. One of your creditors has sued you, and now got a judgment from the local court of law. What can be done? When you are behind on paying your debt, life can be stressful. You may feel helpless, wondering what to do. You were under the assumption that your creditor may not do anything other than call you multiple times per day. Whatever the case, you should know that your situation can get much worse when a creditor sues you and garnishes your wages. In Nevada, this means they can take 25% of your income, leaving you unable to pay for life’s basic necessities. You should also know that bankruptcy can help you avoid this desperate situation.
What is wage garnishment?
A wage garnishment is a court ordered process through which your wages or earnings are withheld for payment of a debt to one of your creditors. It can only be done pursuant to a court decree with the exception of student loan which can be garnished without a court decree. Basically, it is a way for a creditor to confiscate a significant portion of your wages directly from your employer. Garnishment is very painful because you are already suffering and now this additional deduction would add fuel to the fire. It is also unending because the decree holder knows where you work and has the address of your payroll department. You also cannot quit because this is a nice job, and you like to stay and continue working here. Of course you need to continue making your bills. Again, there are not many doors of employment available in Nevada any way. So what can be done?
How does a creditor get a wage garnishment?
In order to get the right to yank your wages and cripple you financially, a creditor has to sue you and get a judgment against you. When you receive a summons notifying you that you’ve been sued, the creditor will probably be able to secure a judgment against you within 30 to 60 days if you do nothing or don’t contest the legal complaint. You may be able to extend this time by answering the complaint, and requesting more time. It never hurts to make the creditor prove their case by asking for a copy of the note or a summary of payments and interest charges.
However, these tactics only buy some time (perhaps another 60 days or so). In general, most debtors do not have a good defense to the lawsuit. If you owe the money and the creditor hasn’t waited too long (for many creditors, they can wait 6 years to sue you), then there’s not much you can do to stop a judgment against you for the amount of the debt plus interest plus their attorney’s fees in recovering the debt.
By the way, you should not simply ignore a summons. It has 20 days of life, and the attorney opposing you knows very well what could be his next step. Once a creditor gets a judgment against you, they can get a writ of garnishment from the court. While the judgment gives the creditor a right to seize certain ‘non-exempt’ assets such as cash in a bank account, creditors pursue wage garnishment for many debtors. This is because many people have few, if any; non-exempt assets (which mean they would keep all of their property in bankruptcy) and wages represent a stable source of income to draw upon.
Once a writ of wage garnishment is issued by the court, it is then served upon your employer, instructing them to withhold a portion of your paycheck and give it to your creditor. The employer is legally obligated to obey the garnishment order.
From the time of the judgment, creditors often can get the writ of garnishment issued and served to your employer within approximately 60 to 90 days. Therefore, from summons to garnishment generally takes 3 to 4 months if you do nothing (again, be wary of the risk of a warrant mentioned above), and can be extended a couple of months if you make the creditor prove their case.
How much can a creditor take through wage garnishment?
The answer depends on the state you live in and the type of creditor suing you. In Nevada, where, most creditors can generally take 25% of your gross wages until your debt is paid. In Nevada as in most states, only one creditor can garnish you at a time. If you are being sued by multiple creditors at the same time, they will have to get in line to drink from the wage faucet that comes from your hard work. But, they will get their turn at your wages if they have a judgment against you.
IRS wage garnishment
The IRS often takes more than the 25% wage garnishment limit because there are special federal laws which govern the amount of your wages the IRS can garnish. This amount is determined by a formula calculating the tax owed the number of dependents you claim and other issues (view tables showing varying IRS garnishment amounts). Generally, this formula lets the IRS take 30% to 70% of your income. These risk of losing this level of income means your really have to do something about your tax debt. Bankruptcy can help. Certain taxes can be discharged in bankruptcy, while other taxes can be paid over 60 months in a Chapter 13.
Student loan wage garnishment
Many student loan lenders, including the Department of Education and student loan guaranty agencies, have the authority to collect federally financed student loans that are in default through a wage garnishment of 15%. These creditors, which essentially represent the government’s money, are unique because they can get the garnishment without a court order. So, if you’re behind by federally financed student loans, you should know that they can easily get to 15% of your wages.
While Bankruptcy does not get rid of student loans for most people, it can help you wipe out other debts so that you can afford to repay your student loans.
Bankruptcy Ends Wage Garnishments
Here, is the good news. Bankruptcy ends this miserable situation and ends garnishment. Now, you can shout Free At Last, God Almighty Free At Last! Do not hesitate in seeking bankruptcy from bankruptcy attorney Malik W. Ahmad. He can give you an initial free consultation.
Feel free to contact our office at 702 270-9100