One method that creditors use to collect an unpaid debt from you is to garnish your wages. Depending on the circumstances and amount owed, you can lose up to 25% of your total paycheck. With some debts, such as child support, up to 60% can be taken. But no matter how much they have been allowed to seize, it’s money you can ill afford to lose.
How the Garnishment Process Works
Wage garnishment is used to satisfy different varieties of debt: credit card bills, medical debt, student loans, outstanding taxes, and unpaid child support are some examples. Most creditors file a writ of garnishment with the court and provide proof of the following:
- That you are legally in debt to them
- A contract exists in which you agree to repay the debt
- The claim cannot be satisfied by securing a lien upon any property
Once they obtain a judgment, your employer is required to hold back a portion of your earnings and forward them to the creditor. Debts that involve taxes, child support, and student loans, however, don’t need a court judgment to start collecting from you.
Some organizations don’t need to go through the courts system. Debts that involve student loans, taxes, and child support payments don’t need a court judgment to collect on a debt.
What You Can Do to Stop Wage Garnishment
If you are unable pay the debt, filing for bankruptcy will also stop the wage garnishment. It will also eliminate most other debts that may be draining your limited financial resources and prevent creditors and collection agencies from chasing you.
Individuals in Utah have the option of filing for Chapter 7 or Chapter 13 bankruptcy. Each one is aimed at a different type of debtor, but both can give you the fresh start you need.
Chapter 7 Bankruptcy
Chapter 7 completely eliminates certain types of unsecured debt, such as cell phone, credit card, and hospital bills. Anyone intending to file for Chapter 7 must have little or no disposable income, so you will be subjected to a means test to determine if you qualify.
Although a trustee is empowered to sell assets to satisfy creditors, it’s a misconception that you need to surrender all of your personal assets in a Chapter 7 bankruptcy. All states have exemptions that protect your personal belongings and certain other assets. If there are any secured debts you want to keep, such as your home, you can sign an agreement that reaffirms your intention to pay the debt.
Chapter 13 Bankruptcy
Chapter 13, which is aimed at debtors in a higher income bracket, does not eliminate your debt entirely but allows you to have your obligations reduced and consolidated into a low monthly payment. This option is best when you have secured and/ or non-dischargeable debts, such as mortgage and car payments or student loans.
If your wages are presently being garnished or if creditors are threatening you with garnishment actions, call Arnold, Wadsworth & Coggins for a consultation today. We will help you stop creditors from taking your hard earned wages and recommend options for improving your financial future.
