If a creditor successfully sues you over a debt then that creditor can garnish your wages. Wage garnishments are humiliating and frightening, as they reduce your paycheck and make it even harder for you to make ends meet.
Certain creditors can garnish without a lawsuit. Money can be taken for child support, unpaid student loans, or unpaid taxes without need for a court case.
Typically this only happens on debts of $5000 or more, but a debt collector can sue over smaller amounts.
Here’s how they work in New York.
How much can creditors garnish?
Creditors may garnish the lesser of 10% of your gross wages or 25% of your disposable wages, that is, the amount that is earned after taxes. This amount may not exceed 30% of minimum wage.
If your disposable income is less than 30x the minimum wage it can’t be garnished at all.
Certain funds are exempt, including SSI, social security, SSD,TANF, income earned while receiving SSI or TANF, disability benefits, workers compensation benefits, black lung benefits, spousal support, alimony, or child support, railroad retirement, or unemployment benefits.
Can creditors take money directly out of my bank account?
This is called levying a bank account and creditors are sometimes allowed to do this instead of garnishing your wages. In New York creditors may not touch the first $2640 in your bank account or credit union even if the funds in the bank account are not necessarily exempt.
Can my employer fire me over a wage garnishment?
It is against the law for employers to fire you over wage garnishments. They may not refuse to promote you or take any other action against you.
That doesn’t mean that employers aren’t pretty good at coming up with other reasons to fire you. When you are being garnished it’s a good idea to become a model employee.
How can you make a wage garnishment stop?
The only way to make a wage garnishment stop is to file bankruptcy. The automatic stay puts an end to all wage garnishments while your case is pending. When you receive your bankruptcy discharged the debt goes away, unless it’s student loan debt. Even then, you may be able to get caught up enough to stop the problem.
If you can do this before the lawsuit moves forward then you might not ever get garnished at all. If you don’t we may still be able to “claw back” what the creditors took from you so that you have a little more money to live on while the bankruptcy case is in progress.
Don’t let garnishments make your life even more stressful. Reach out to Haysom Law today to get the help you deserve.
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