Has your credit card debt piled up and a credit card company is asking you to repay? Have your medical bills racked up and now collection agencies are relentlessly hounding you? While you may be able to ignore your debt, they could sue you and get your wages garnished until it’s paid off. This article contains information and ways for you to stop wage garnishment
What Is a Wage Garnishment?
A wage garnishment is an order from a court or a government agency. A creditor can use it to get your employer to withhold an amount from your paycheck. Garnishment laws make it so they can’t fully deduct your paycheck.
Pursuant to California state law and federal law, lenders can’t garnish more than 25% of an employee’s wages after deductions. If you have low income, California offers even more protection.
When Can a Creditor Garnish Wages in California?
A lender must sue and get a money judgment against you before they can get wages withheld. First, they have to file a lawsuit against a debtor and win. After obtaining the judgment, documentation must be sent to your employer. The documents direct your employer to take any amount of your paycheck and send it directly to the person or institution you owe money to until your debt is paid in full.
Some debts are exempt from having to go to court first. This exception exists for the following debts:
- defaulted student loans
- court-ordered child support and arrearages
- unpaid income taxes
California Wage Garnishment Limits
Federal law limits the garnishment on wages so that you could have enough left money for living expenses. California gives you these federal benefits, albeit with some variation.
For any given workweek, creditors are allowed to garnish:
- 25% of your disposable earning
- the amount by which your weekly disposable earnings exceed 40 times the minimum state hourly wage.
“Disposable earnings” are those wages left after your employer takes out required deductions.
California provides more protection for those earning close to minimum wage. The federal minimum wage is much lower than the California minimum, and the multiplier is 40 instead of 30.
As an example, let’s say your disposable income for a weekly pay period is $700. If we compute 25% of your disposable earnings, that would be $175. The California minimum hourly wage is $12.00, multiplying it by 40 gives us $480. A collection agency would get the lower of the two, which is $175.
Comparing it with federal law, the minimum wage is $7.25, multiplying with 30 gives $217.50.
How Can I Stop Wage Garnishment?
You may be able to keep more of your earnings if you file for bankruptcy. Filing for bankruptcy Chapter 7 places an automatic stay, preventing debt collectors from garnishing wages.
The automatic stay ends when your bankruptcy case ends. However, the nonexempt debt can get discharged in bankruptcy. As such, the debt collector cannot continue the wage garnishment. However, note that some types of debt such as tax debt or student loan debt cannot get discharged with bankruptcy.
Rules for Tax Debt, Student Loan, and Family Support
The federal government doesn’t need a court judgment to garnish your wages for back taxes. The same goes for states and local governments if they want to collect state and local taxes. If you owe California state taxes, the deduction cannot be greater than 25% of your disposable income.
For child support, your wages are automatically deducted. If you pay alimony or spousal support, this may be combined with child support for family support, and the total amount owed will be deducted.
If you’re not supporting another spouse or child, the limit on your garnishment is 60%. If you’re supporting a spouse or child other than the subject of the court order, the limit is 50%. Furthermore, if you have 12 weeks of unpaid child support, your wages are garnished an extra 5%.
Defaulted Student Loans
If your federal student loans default, no money judgment is needed for wage garnishment. For student loan debt, the U.S. Department of Education can collect 15% of your disposable income, but no more than 30 times the federal minimum wage
Job Firing and Wage Garnishment
Your employer may find it bothersome to comply with garnishment orders. State and federal law provide some protection for you in this situation.
Your employer cannot discharge or terminate you if you have one wage garnishment order. Federal law won’t protect you if you have more than one.
During these times of hardship, it can be hard to pay back any money owed. Filing for bankruptcy can protect you from the garnishment of wages. Contact the Law Office of Daniela Romero and get in touch with experienced Pasadena bankruptcy attorneys for legal help with how to file for bankruptcy!