Dena Standley | May 12, 2023
Summary: You can lose a lot of disposable income if your wages are garnished, causing stress in your finances and life. The good news is that there are direct ways to stop wage garnishment immediately if you know your rights. Several laws protect you from garnishment, and SoloSuit is here to help.
Did you know under the Consumer Credit Protection Act of 1968 (CCPA), private creditors cannot garnish your wages at the federal level? Yes. It prohibits your employer from terminating your employment because of a single garnishment and shields a portion of each paycheck from garnishment.
Further, your state may adopt more restrictive measures. Many states prohibit private creditors from garnishing more than 25% of disposable earnings or 30 times the federal minimum wage under the CCPA. Further, the garnishing creditor cannot take certain wages that cover your living expenses.
The most effective way to safeguard your paycheck is to know your state laws and pay off the debt immediately. But if you cannot make payments, you have some immediate options for stopping wage garnishment.
Alternatively, avoid wage garnishment through debt settlement.
Garnishing your wages does not occur without warning; the creditor must notify you beforehand through a "demand letter." Don’t ignore a demand letter from your lender. The sooner you respond to notification of an upcoming wage garnishment, the better.
In many cases, creditors prefer voluntary payments to costly paperwork and garnishments, and it’s the best time to negotiate a debt and make a payment plan. But you should take immediate action if you cannot afford wage garnishment.
Debt settlement is a great way to avoid wage garnishments in the first place. The following video shows how to settle your debts if you and your creditor are open to negotiations.
In the case of an ignored demand letter, a garnishment is likely to occur. But you may object to the garnishment in an official and legal notice if you disagree. When you believe you have a basis to fight the garnishment, ask the court for a hearing and use one of these objections:
You must file this objection within 14 days of receiving the writ. If no objection is submitted within 14 days, a periodic, non-periodic, or tax refund garnishment will occur, and the withheld funds will be paid to the creditor. Let's look at an example.
Example: Sally had a debt of $2,300 with Fancy Credits. Once the debt collector started calling, she cleared the debt with a new loan. Even after paying, Fancy Credits sued Sally for the same debt and got a default judgment because she did not attend the court hearing. When she received the garnishment order Sally filed an objection with the court on the grounds that the debt was fully paid and Fancy Credits needed to update their records. During the hearing, Sally presented proof of payment, and the judge dismissed the garnishment order.
There are currently 23 states that follow CCPA Title III of the federal garnishment limits, and 27 have passed laws lowering the garnishment ceiling to a level below what federal law allows. Four states entirely prohibit private creditor garnishments: North Carolina, Pennsylvania, South Carolina, and Texas. It is important to remember that these states still allow for garnishments for child or spousal support.
The exempt amount is increased even further in nine states by setting it at a multiple of the local or state minimum wage instead of the federal minimum. Florida, for instance, considers wages earned by the head of the household to be exempt wages.
If you show that you are suffering economic hardship and need your income for support, you can reduce or remove the garnishment. Generally, ordinary creditors can't garnish the following incomes:
Ensure to fill out the exemption form and submit it to the court that issued the garnishment order before the deadline on your paperwork. The court will schedule a hearing after your submission. Remember to bring proof of your income and all expenses that show you cannot afford the essentials.
Declare bankruptcy under Chapter 7 or Chapter 13 garnishment immediately. The bankruptcy process does not only stop most wage garnishments, but it also wipes out most collection debt.
The bankruptcy chapter you declare will determine what happens to your debts:
But remember, if a creditor has a non-dischargeable debt, it can continue to collect it after bankruptcy. In Chapter 13, you repay all non-dischargeable debt. While bankruptcy immediately stops most garnishments, it hurts your credit score.
Habitually, creditors and debt collectors are not interested in pursuing your case further, and negotiating is possible after a garnishment has been initiated. If you put pressure on the lender and negotiate, you can stop the garnishment.
SoloSettle, powered by SoloSuit, is a tech-based approach to debt settlement. Our software helps you send and receive settlement offers until you reach an agreement with your creditor. To learn more, check out our guide on the pros and cons of debt settlement.
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SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.
Here's a list of guides for other states.
Being sued by a different debt collector? Were making guides on how to beat each one.
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