Imagine receiving your next paycheck and learning that 25% of it has gone missing!
Then, imagine learning that the reason for the missing money from your paycheck was because your wages are being garnished.
What do you do then?
Your paycheck (wages) and tax refunds can be garnished by creditors that have sought and won a judgement against you and for whom you have a legal obligation to pay.
Now, just because your wages or tax refund is being garnished doesn’t mean that you are completely defenseless. In fact, under the counsel of an experienced attorney, the bankruptcy process can help to alleviate the burden of garnishments.
The different kinds of garnishment include wage garnishment, tax refund garnishment, and federal tax refund garnishment (which must be a federal debt).
These types of garnishments also have different frequencies with which they seek to secure payment.
First, there is what is called a Non-Periodic Garnishment. This is a one-time garnishment of a bank account or tax refund to collect money for any creditor who obtains a judgement against you. This could include debts stemming from defaults on payments of any type of debt, such as medical debts, student loans, credit cards , car repo deficiency balances and loans. It could also be that a judgment was entered against you where somebody sued you for damages for anything from a breached residential lease to automobile negligence.
Second, is a Periodic Garnishment. This is a garnishment that occurs on a regular basis in an attempt to collect money for a judgement. For example, a garnishment request is sent to an employer to garnish an employee’s wages. The employer is ordered to withhold a certain percentage of net pay (such as 25%) to satisfy the garnishment. Once a garnishment is submitted to employer it is valid for 90 days and can be used for that duration to garnish the wages of a debtor for every paycheck received during the 90 day period.
It is also important to mention that child support and income tax debts do not always need a judgement for garnishment and can fall under either a periodic and non-periodic garnishment.
When someone has their wages or tax refund garnished we sometimes see that their first response is to turn to a pay day loan so that they can try to survive the financial loss created by the garnishment. Unfortunately, this is a huge mistake where you end up working just to pay back the pay day loan. People then often have to get another pay day loan to survive until the next pay period. This becomes a vicious cycle and your life can become like a merry-go-round that you just can’t stop. In the meantime, the garnishments don’t stop either.
As an alternative, we encourage our clients to consider using bankruptcy as a solution to stop their garnishments. And, under limited circumstances, there may even be an opportunity to get garnishment money back through the bankruptcy process.
Wage loss and garnishment can cause an initial shock. After that wears off your next best move is to contact an experienced bankruptcy attorney who can help you navigate the bankruptcy and garnishment process.
If you would like an experienced set of eyes to review your situation, we encourage you to contact us today for a confidential review or call (248) 350-8220.
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