Wage garnishment is a legal remedy creditors can use to collect payment from debtors who have defaulted on their credit card debts, personal loans, medical bills or other debts. Having your wages garnished can be stressful and taxing, especially if you are struggling to make payments on your mortgage, auto loan or credit cards while also providing for your family’s needs. Fortunately for those dealing with wage garnishment in Los Angeles, there are options for dealing with the garnishment and getting your finances back on track once and for all, one option being bankruptcy. Many people see bankruptcy as a last resort for those in need of financial help, but it can actually be a useful tool in putting a stop to wage garnishment and it is a much better alternative for many people. If you are in debt in Los Angeles, you may be able to put a stop to wage garnishment by taking advantage of the automatic stay that accompanies a Chapter 7 or Chapter 13 bankruptcy filing. Contact our knowledgeable bankruptcy lawyers at ibankruptcyattorneys.com today to discuss your debt-relief options in detail.
What is Wage Garnishment?
Wage garnishment is a formidable debt-collection action creditors in Los Angeles can employ to reclaim debts you owe by taking money directly from your paycheck until the debt is fully paid off. When your wages are being garnished, your employer will withhold a certain portion of your wages from each paycheck to be sent directly to the creditor you owe money to. By garnishing your wages, creditors can bypass the traditional method of debt repayment and ensure that they receive consistent payments on your outstanding debts.
Will My Wages Be Garnished?
Every wage garnishment situation is different, which is why we recommend consulting an attorney if you think your wages may be garnished to repay your debts. However, if you are employed, you have fallen behind on your bills and you are receiving calls and/or letters from your creditors, it is possible that your wages will be garnished. Unfortunately, once a lender has set into motion the chain of events that leads to wage garnishment, the garnishment could continue for a very long time, depending on how much you make and how much you owe.
Wage Garnishment Limits in California
The right of creditors to garnish your wages to collect on debts you owe is governed by state and federal law, as is the amount creditors are permitted to deduct from your paycheck.
According to federal law, your wages can only be garnished up to 25% of your disposable earnings (your earnings minus taxes and other deductions) or the amount by which your wages exceed 40 times the minimum wage, whichever amount is lower.
The state law in California offers slightly better protections than federal law for debtors at risk for wage garnishment. According to California law, your wages can only be garnished up to 25% of your disposable earnings or the amount by which your wages exceed 30 times the minimum wage, whichever amount is lower.
Even if you have multiple creditors garnishing your wages at once, the total amount that can be deducted from your paycheck is up to 25% of your disposable earnings, except in the case of alimony, child support or tax debts, for which the limits are higher. Depending on how much you make, your disposable earnings could be low enough that your wages cannot be garnished at all.
Wage Garnishments without a Court Judgment
In most cases, creditors can only garnish your wages if they sue you for the debt, get a judgment against you and secure a court order permitting the garnishment. However, if you have defaulted on your student loans or if you have unpaid income taxes or back payments of child support, your wages can be garnished without a judgment from the court. Still, even under these special circumstances, there are limits on the percentage of your income creditors can go after for unpaid debts:
- Student loans – Up to 15% of your disposable earnings, but not more than 30 times the minimum wage
- Child support – Between 50% and 60% of your disposable earnings, depending on whether you have other dependents not covered by the support order
- Taxes – Up to 70% of your disposable earnings for the IRS, or up to 25% for state and local governments in California
Illegal or Abusive Wage Garnishments
Wage garnishment is a legal remedy available to creditors who obtain a garnishment order from the court. Unfortunately, sometimes illegal or abusive garnishment occurs when unscrupulous creditors misuse the wage garnishment remedy, taking advantage of debtors who are already overwhelmed by unpaid debts. Our attorneys will not stand for illegal or abusive wage garnishment and we can help you evaluate the options available to you for putting a stop to it.
How to Stop Wage Garnishment
If your wages are being garnished, they will continue to be garnished until the debt is paid in full or until the debt is resolved by some other means, such as through bankruptcy. One of the most important benefits of bankruptcy, besides helping to relieve crippling debt, is the automatic stay that goes into effect the moment you file a petition with the bankruptcy court. Whether you are seeking bankruptcy protection under Chapter 7 or Chapter 13, the automatic stay will automatically “stay,” or stop, collection actions against you, including creditor harassment, repossession, foreclosure proceedings and wage garnishment. An automatic stay associated with a bankruptcy filling will only end if:
- You receive a bankruptcy discharge,
- Your bankruptcy case is dismissed without a discharge, or
- The court lifts the stay.
It is important to note that there are certain types of wage garnishments that are not affected by a bankruptcy filing, including wage garnishments for domestic support obligations. So, if your wages are being garnished to pay alimony or child support, the garnishment will likely continue even in bankruptcy.
Benefits of Chapter 7 or Chapter 13 Bankruptcy
Filing for bankruptcy is a way for debtors in Los Angeles to put an immediate and effective end to wage garnishment and other debt collection actions. When you file your bankruptcy petition, the bankruptcy court will notify your creditors that you have filed for bankruptcy, at which point they are barred from continuing attempts to collect payment from you. This includes garnishing your wages or any other kind of creditor harassment.
In addition to stopping wage garnishment, bankruptcy can help you get a handle on your debt once and for all and put yourself in a better financial position moving forward. For instance, if you have more debt than you can afford to pay back, given your income and expenses, you may qualify for a Chapter 7 bankruptcy, in which your nonexempt assets will be liquidated and the proceeds will be used to pay back your creditors. On the other hand, if you have a steady income and you want to protect your assets, you may be eligible to seek bankruptcy protection under Chapter 13, which allows you to create a repayment plan to pay back all or a portion of your debt over a three- to five-year period. Any unsecured debts remaining at the end of the Chapter 13 repayment period will be discharged or wiped out.
If you receive a bankruptcy discharge under Chapter 7 or Chapter 13, and the debts for which your wages were being garnished (i.e. medical debt or credit card debt) were included in the discharge, the wage garnishment for these debts will also be eliminated. It is important to note that there are some types of debts for which your wages can be garnished that cannot be resolved by bankruptcy. For instance, student loan debt, child or spousal support obligations and certain tax debts are not dischargeable in bankruptcy and even if you file for bankruptcy, wage garnishment actions involving these types of debts may proceed.
Recovering Garnished Wages
In some cases, you may be able to recoup some of the wages that were garnished prior to your bankruptcy filing. If you file a petition for bankruptcy and your wages were garnished within 90 days of the filing, the total amount garnished exceeds $600, and you have enough bankruptcy exemptions to cover the garnished wages, you may be able to recover them. Your bankruptcy attorney can help you fill out the necessary documents requesting the refund of the garnished wages and file the documents along with your bankruptcy paperwork.
Alternatives to Bankruptcy
If you do not wish to file for bankruptcy, you may still be able to stop wage garnishment by contacting your creditor and attempting to negotiate some other arrangement for paying back the money you owe. Depending on the creditor, you may be able to offer a one-time payment, also known as a settlement, rather than having your wages garnished. Another possibility involves challenging the wage garnishment order by filing a “claim of exemption” with the court. In order to qualify for exemption from wage garnishment, you must show that having your wages garnished would interfere with your ability to pay for basic necessities. Whether you choose to file for bankruptcy or seek some other means of reconciling your debts and avoiding wage garnishment, it is a good idea to consult an experienced bankruptcy attorney to ensure that you fully understand the pros and cons of each option available to you.
Why Hire a Wage Garnishment Attorney?
If you have fallen behind on your mortgage, auto loan, credit card payments or medical bills, you have likely received phone calls from creditors or debt collection agencies threatening to sue you or garnish your wages. Many people assume that these are just empty threats creditors use in an attempt to pressure debtors into paying, but wage garnishment is not something you should ignore. If you are currently experiencing wage garnishment, it can be difficult to know where to turn for help. Many people are too embarrassed to tell their friends or loved ones that they are struggling with crippling debt for fear that they will judge them for their mistakes. Sometimes it is easier to speak to someone you don’t know personally, someone who understands how devastating garnished wages can be and can give you legal advice about how to deal with wage garnishment.
At ibankruptcyattorneys.com, our competent wage garnishment lawyers are committed to protecting the rights of debtors whose wages are being garnished by one or more creditors. When you hire our firm to handle your wage garnishment issues, we will ensure that your rights are protected and do everything in our power to put a stop to the garnishment. With ibankruptcyattorneys.com handling your case, you also get the added benefit of working with a team of attorneys who specialize in California bankruptcy law. Our reputable bankruptcy lawyers have years of experience representing clients in bankruptcy cases in Los Angeles and throughout Southern California, and we can help you determine whether a Chapter 7 or Chapter 13 bankruptcy filing will stop your wages from being garnished or whether you have some other legal remedy against illegal or abusive garnishment.
Our Knowledgeable Bankruptcy Attorneys Can Help
No one wants to have their wages garnished. Wage garnishment can be distressing, demeaning and humiliating, especially since it ensures that your employer becomes aware of your debt problem. Even more importantly, wage garnishment can put an added financial strain on you and your loved ones at a time when you are already experiencing financial hardship due to overwhelming debt. For individuals and families struggling to stay afloat, wage garnishment can be devastating, and in many cases, filing for Chapter 7 or Chapter 13 bankruptcy is the best option for stopping the garnishment and discharging or repaying the debts that are owed. If your wages are being garnished and you are considering filing for bankruptcy under Chapter 7 or Chapter 13, our Los Angeles wage garnishment attorneys at ibankruptcyattorneys.com can help. Call us today to schedule a free initial consultation with our skilled bankruptcy lawyers.