If you have received a court order against you as a result of missing payments, such as loans, rent, or other debts, and have failed to act on other collection attempts, you may be subject to a wage garnishment under California Code of Civil Procedure §§ 706.010 – 706.154. A wage garnishment, or Earnings Withholding Order, requires your employer to withhold a portion of your paycheck for a period of time. The withheld money will be sent directly to the owed creditor, and your employer will continue to do so until you are no longer in debt. In order to prevent your employer and creditor from withholding too large of an amount from each paycheck, a limit is set by the state to prevent excessive amounts from being garnished. In California, federal laws allow creditors to garnish no more than 25% of each period’s disposable earnings. Disposable income is the amount of wages leftover after any deductions, such as Social Security, have been made by your employer. Alternatively, the limit may be determined based on the state’s hourly minimum wage. If your weekly earnings exceed the amount earned if paid the hourly minimum wage, up to 40% of that difference may be garnished. Whichever method yields a lesser amount will be utilized.
For a wage garnishment to occur, the first step the creditor must take is to file a creditor lawsuit. The purpose of this lawsuit is to claim that you have failed to make payments on your debts. The court will file the lawsuit, and you will be served a copy of the complaint and the summons. This will explain the claim being filed against you and provide you with information for what you must do next. If the court reaches a judgment in agreeance with the creditor who filed the lawsuit, the creditor will be issued a money judgment entitling him/her to receive money from you. Once the creditor has received a money judgment, then he/she will be able to pursue a wage garnishment. Creditors will provide the local sheriff’s department with a copy of the order, who will then notify your employer that your wages are to be garnished. Your employer will then begin to withhold the set amount of your wages and send it to your creditor.
While this process must be followed for most debts, there are certain debts that do not require creditors to file a lawsuit first and receive a money judgment. This includes the following:
- If you have failed to pay any federal, state, or local taxes, government collecting agencies may proceed with a wage garnishment without approval from the court. The amount to be collected varies depending on the number of dependents you have. In most federal cases, a large amount can be taken from your disposable income.
- Court orders regarding child support automatically include an income deduction order that allows employers to take out a portion of your paycheck. Additionally, the other parent can still choose to receive a judgment from the court and collect the amount due in other ways. The amount garnished may be up to 50% of your disposable income. Although child support does not require a judgment beforehand to collect wages, the creditor must receive a judgment for cases regarding alimony unless the debtor owes both child support and alimony.
- If you owe student loans and have failed to meet payments for at least 270 days, the crediting agency has the ability to conduct a wage garnishment without receiving court approval beforehand. If the US Department of Education is collecting on the debt, the most they are able to collect is 15% of your disposable earnings. Within 30 days of the first garnishment, you will receive written notification of the amount you owe. Additionally, you may choose to enter into a repayment plan or request another hearing.
WAGE GARNISHMENTS VS. INCOME DEDUCTION ORDERS
Similarly to a wage garnishment, an income deduction order may be placed to provide creditors with an alternative way to receive any money owed to them. Similar to a wage garnishment, an income deduction order allows your employer to withhold an amount of your paycheck and give the money directly to creditors. Generally, income deduction orders are used mainly in cases regarding child supports.
Unlike wage garnishments, income deduction orders do not follow the limits set in regard to the amount that may be collected. In Chapter 13 Bankruptcy, a repayment plan is established through the court that outlines the amount of money owed to creditors, when/how often these payments must be made, and for how long the debtor must continue completing payments. If you are following a repayment plan and an income deduction order has been placed, the creditor is able to take the amount owed directly from your paycheck, even if the amount is equal to the entirety of your disposable income.
Lastly, income deduction orders do not necessarily mean that you have failed to make payments. In many child support cases or repayment plans, income deduction orders may automatically be included as a method for you to automatically meet payments and not miss deadlines.
HOW WILL A WAGE GARNISHMENT AFFECT ME?
Since a wage garnishment involves a portion of your income being taken directly out of your paycheck, you will be receiving less money than you otherwise would. In some cases, your employment may not be secured. If you have one wage garnishment against you and your employer fires you, federal law will protect you and prohibit your employer from terminating your employment. However, if you have more than one wage garnishment against you, the law is unable to provide you protection, and your employer may continue with terminating employment. Additionally, parts of your income are secure and cannot be garnished from your paycheck. This includes any income received through Social Security and disability payments.
THE COURT HAS ORDERED FOR MY WAGES TO BE GARNISHED. WHAT CAN I DO NEXT?
If you have been unsuccessful in paying your debts on time and the court has ordered for your wages to be garnished, there are still some options available to adjust or even eliminate judgment. Examples of this include the following:
Filing an Exemption
When it comes to trying to lower the amount for a wage garnishment, it is important to be aware of your state’s exemption laws. These exemption laws are meant to provide you with protection and allow you to make necessary purchases and payments for living expenses without falling into further debt. To file an exemption, you must fill out the appropriate paperwork with the Court, including information such as who the creditor is that previously received the judgment against you. You will explain which exemption you fall under, and a hearing will be established where you will further demonstrate why that exemption should be filed. The creditor may choose to attend the hearing. If so, he/she could have the opportunity to explain why the garnishment should remain in place. After hearing from both parties, the judge may decide to terminate your garnishment, reduce the amount, or continue with initial judgement.
One of the most common exemptions filed is the Head of Household Exemption. If you are the primary or majority earner in your household and provide at least 50% of the finances for any dependents, it could be possible that you may seek protection under the Head of Household Exemption. This exemption will adjust the amount of wages to be garnished accordingly based on how much income you will need to provide your dependents with all necessary living expenses. If granted, it is crucial that you are using your income for needed living expenses and towards your debts.
Filing for Bankruptcy
If you decide to file a Chapter 7 or Chapter 13 bankruptcy case, your wages are protected from being garnished by creditors. Additionally, you could potentially eliminate any other outstanding debts. Once your case has been filed, the automatic stay is enacted, providing you protection from creditors. In addition to ensuring your paycheck is not affected, the automatic stay prevents home foreclosures, evictions, service disruptions, and creditors from filing any new lawsuits. While it is not a permanent solution, the automatic stay is designed to temporarily assist you throughout your bankruptcy case and prevent you from accumulating more debts along the way.
Once your bankruptcy case has been filed, the court will notify your creditors of the filing. This will allow them to know they are unable to pursue a wage garnishment. In addition, if a wage garnishment has previously been enacted within 90 days of the filing date, it may be possible for you to get back the money that was garnished. To do so, you would need to file a lawsuit. If creditors fail to follow the rules of the automatic stay and order your employer to garnish your wages, he/she will be in violation of the automatic stay. As a result, the court may require that the creditor make a payment. If a creditor is in violation of other laws, it may be possible for you to file a lawsuit against him/her, as well.
The outcome varies depending on which chapter your filed under. If you file a Chapter 7, the garnishment may potentially be eliminated altogether. If you file a Chapter 13, you may still be required to repay your debts. However, instead of a wage garnishment, you will do so through a monthly repayment plan. Chapter 13 filings require debtors to establish a repayment plan with creditors to ensure their debts are being paid. In some cases, a wage garnishment may be incorporated into your plan and give creditors the ability to receive the monthly payment directly from your employer.
In addition to the automatic stay, Chapter 7 and Chapter 13 bankruptcies allow you to list property as exempt. This will prevent you from not only losing your income but also from losing your property and assets.
Filing an Objection to Vacate the Judgment
If you feel you have wrongly been issued a money judgment allowing for a wage garnishment, you may attempt to fight the order. To do so, you must begin a filing with the Court. The summons and complaint provided to you upon being served will explain all that must be included. This will inform you of how long you have to file your objection, guidelines for writing the objection, and where it is to be filed upon completion. In the objection, you must list in writing the reason for your filing. Once completed and filed, your creditors will be informed, and a hearing date will be issued. This will be your opportunity to explain why your wages should not be garnished. It is important to bring any documentation or evidence that may help present your case. If the court finds your claim to be valid, there may be an option to have the terms adjusted or even lift the order for wage garnishment. If you do not choose to file an objection before the deadline, you cannot eliminate the garnishment, and creditors may proceed with garnishing your wages.
If you are attempting to oppose a garnishment that resulted from debts regarding taxes, students loans, or other debts that did not require the creditor to obtain a court order before garnishing wages, the process slightly differs. If the IRS has decided to pursue a wage garnishment, you will be notified. The IRS will give you the opportunity to complete an exemptions form, which may allow for an adjustment to be made. If you have fallen behind on student loan payments, you will be notified at least 30 days before the garnishment occurs. The Notice of Intent to Garnish will list several options for adjusting the garnishment. One option may be to request a hearing which will give you the opportunity to present evidence that demonstrates why your wages should not be garnished. Until the hearing has concluded, wage garnishment will not occur. Another option is to agree to a payment plan with your creditor. This will allow you to have more control over your wages and prevent too much from being taken from you.
Communicating with the Creditor
In some rare cases, it may be possible to negotiate the terms of your wage garnishment without court involvement. Debtors and creditors are sometimes able to work together and establish an alternative method, such as a payment plan. As mentioned, this is rarely an option that proves successful for most. Wage garnishments are usually a last resort method of collection, so it is likely that a payment method may have previously been attempted and was unsuccessful.
If you owe money to creditors and have are at risk of having your wages garnished, it is important to understand all of the options available to you, as well as your rights. Here at Modesto Bankruptcy Attorneys, our attorneys are ready to answer your questions and assist you in preventing your wages from being garnished. With 18+ years of experience, our attorneys are able to analyze your case and apply their knowledge to your personal situation. Contact us today to schedule your free consultation and begin working on your case.
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