Garnishment (or “attachment”) is a last-ditch effort at debt collection, a tool of last resort for creditors. When you default on a debt, and the creditor is unsuccessful in recovering on the debt, a judgment may be issued against you to garnish property, bank accounts, or wages. Garnishment can often severely impact your monthly finances, and garnishment reflects very negatively on your credit score and credit report. How do you stop garnishment? You have to either pay off the debt or file bankruptcy.
Once a garnishment has started, your only choices are to make a deal with the creditor or to declare bankruptcy. If you think your creditor or collection agency may be taking steps to have your wages garnished, act quickly. The best way to stop garnishment is to settle the debt beforehand or discharge it in bankruptcy. If the creditor is able to get your payroll to deduct from your wages, you will not be able to stop garnishment until the debt is paid in full.
Stop Garnishment of Wages
Garnishment can be personally embarrassing. After all, your employer is now aware that you are experiencing financial problems. While the Consumer Credit Protection Act makes it illegal for an employer to fire you for a single garnishment, if you have more than one garnishment, all bets are off.
There are garnishment limits unique to every jurisdiction. In addition, the federal Consumer Credit Protection Act limits garnishment to 25% of your disposable income. Every state also has its own garnishment exemptions.
If your paycheck garnishment is severely impacting your ability to support yourself and your dependents, you may ask the court to reduce the percentage of your garnishment. You must fully document your household income and monthly expenses in order to convince the court that your garnishment should be reduced.
Stop Bank Account Garnishment
Creditors may also garnish bank accounts and other forms of property. This is called “nonwage garnishment.” The creditor will attempt to attach (or seize) the entire amount of the bank account, up to the amount of the debt owed. If there was a lien legally placed against your account, the only way to get the money back is to file bankruptcy quickly after the account has been frozen. You must act quickly, before the bank transfers the money to the creditor.
It is legally irrelevant whether the account is held jointly or whether the money in the account was actually deposited by you. You may simply stop keeping your money in a bank account, however, that is obviously very inconvenient. You will also need to change any direct deposits and automatic bill payments. The only sure-fire way to stop a bank account garnishment is to file bankruptcy.
Stop IRS Garnishment
Most federal agencies, including the Internal Revenue Service, can garnish up to 15% of your after-tax income. The IRS garnishment will continue until the liability is paid in full or until the statute of limitations prevents the IRS from collecting the tax.
The very best way to stop an IRS garnishment is to enter into an installment plan in which you make a monthly payment in addition to your income withholding.
The IRS can garnish both Social Security retirement and disability benefits. IRS Code Section 6334(c) allows garnishment for collection of federal tax liabilities. Typically, the IRS will garnish up to 15% of these benefits.
Stop Garnishment on Student Loans
The Department of Education can garnish 15% of your after-tax income. The federal government, unlike other types of creditors, has an additional weapon: administrative wage garnishment. This means that the government can garnish wages, attach bank accounts, and seize property without first getting a court order or judgment against you. You must be notified in writing, however, at least 30 days before the garnishment begins.
Unlike private creditors, the Department of Education is somewhat easier to deal with, and you may be able to prove that the garnishment is causing you or your family an undue hardship. Private student loan creditors will not afford you such an opportunity.
Stop Garnishment Without Bankruptcy
Creditors will not consider a repayment plan once a garnishment has already started. The creditor has already gone through the time and expense of obtaining judgment against you. Once wage deductions have begun, they will not stop garnishment voluntarily.
Instead of trusting you to make payments, the creditor receives regular and timely payments from your payroll department or bank.
Stop Garnishment in DC, VA, MD
Ignoring money problems doesn’t make them go away. Smart consumers understand that a proactive approach can avoid garnishments before they even start. Call an experienced debt settlement and bankruptcy attorney to explore your options.