How Can We Avoid Wage Garnishment?

What Is A Wage Garnishment?

When creditors have been calling you and are demanding payment and you have nothing to give, you may have already heard the term “wage garnishment.” It is meant to scare you, and to be honest, it should.

A wage garnishment is a way by which creditors can collect money you owe them by taking a portion of your paycheck. It is truly a practical legal tactic and a last resort for most debt collectors, and it does happen.

Many are concerned how a wage garnishment works with student loans. Under the Higher Education Act, the department and guaranty agencies may require employers who have defaulted on repayment of a student loan to deduct 15% of the borrower’s pay per pay period toward repayment of the debt.

Also, the Debt Collection Improvement Act of 1996 permits the Department to garnish up to 15% of disposable pay. Garnishment may continue until the entire balance of the outstanding loan is paid off.

What Are The Steps Taken To Wage Garnishment?

A writ of garnishment is an order granted to a creditor by a court ordering an employer or
company or educational department to garnish the wages of the defendant by a certain amount from each paycheck. Such a writ is only granted after the creditor has filed suit to recover a debt and receive a favorable judgment.

A writ of garnishment not only states the amount to be garnished from a person’s paycheck; it also provides instructions as to where the amount taken from the paycheck should be sent. If your employer receives this writ, he has no choice but to do as he has been instructed, no matter how much he may not want to.

An employer who refuses to do so would face serious legal trouble himself since he would be disobeying an order of the court. If you are having trouble paying your loan the creditor can go to court and ask for a “judgment” detailing how much you owe and the interest rate you must pay.

The creditor then can get an order from the court to garnish your property, that is, take something that belongs to you to pay off the judgment. You’ll have the chance to appear in court and explain why the creditor should not be allowed to garnish your property.

How To Avoid A Writ Of Garnishment.

The best way to avoid having your wages garnished is to avoid being sued in the first place and keeping your part of the agreement to pay back your loan. Many consumers go into denial mode when they cannot pay their debt and try to hide from and avoid their creditors by ignoring them. This is the worst thing that you can do.

The best thing you can to is to talk to your creditors to see if you can negotiate a payment plan. Better yet, if you communicate with them telling them why you cannot repay your debt, offering a reduced monthly payment and keeping them informed of your financial progress, is a much more effective way to handle the problem and avoid any type of garnishment.

Also, being open and honest with your creditors you won’t jump every time the phone rings or lay awake at night worrying. Even though creditors are under no obligation to work with you in this way, many companies would rather give you the opportunity to repay them than going through the legal system.

Creditors spend a fortune on collection costs and are motivated to avoid lawsuits. Both you and your creditor benefit by communicating and working out a substitute repayment plan to keep you from being sued.