Bankruptcy

What Is Wage Garnishment?

By
David F. Mills
on
July 26, 2021

In some situations, your wages may be garnished to repay certain debts. If this is happening to you now, or you may be affected by wage garnishment in the near future, you may have some questions about what it is and how it works.

In some situations, your wages may be garnished to repay certain debts. If this is happening to you now, or you may be affected by wage garnishment in the near future, you may have some questions about what it is and how it works.

What Is Wage Garnishment?

Wage garnishment takes place when your employer withholds a certain portion of your wages based on a court order. Your employer will send this money directly to a person or entity to which a debt is owed.

In other words, you never see this money. It is taken from your pay before you receive it, and sent to the creditor to pay a debt that you owe. Except in the cases of student loans, child support, and taxes, a creditor must first sue you in court, win, and obtain a court order to begin garnishing your wages.

When Are Wages Garnished?

Wages are garnished when you lose a court case against a creditor. For example, if you own $10,000 on a car that was repossessed and you don’t pay, the creditor may sue you and win a monetary judgment against you. They can then enter a copy of the court order with the local sheriff.

Then, your employer must garnish your wages as required by this court order. Federal regulations govern the amount of wage garnishment. The amount taken must be the lower of:

  1. Up to 25% of your disposable earnings

  2. The amount by which your weekly income exceeds 30 times the minimum wage

Different rules apply to wage garnishment for child support, student loans, and taxes, as these are special cases. Additionally, North Carolina has laws in place that prevent wage garnishment from most common debts, including medical debt, personal loans, and credit card debt. While there are other ways that creditors can seize your money and property, they cannot garnish your wages.

Can You Stop Wage Garnishment?

If a creditor has won a judgment against you, you can file papers to prove to the court that you qualify for an exemption, or that you need more of your paycheck to pay for your living expenses. 

How Can Bankruptcy Help With Wage Garnishment? 

If you file for bankruptcy, an “automatic stay” will take effect to prevent most types of collection activities, including wage garnishment. This does not apply to child support or alimony, since these are “non-dischargeable” priority debts.

If a creditor wants to continue garnishing your wages, they must prove to the court that there is “good cause” to lift the stay. Generally speaking, it is very difficult for creditors to present a good cause and get a stay lifted for unsecured debt like a personal loan, credit card, or medical debt. 

This automatic stay will end when you receive a bankruptcy discharge, or if your case ends without a bankruptcy discharge. If the debt was included in your discharge, the creditor can no longer garnish your wages. However, if you do not get a discharge, the creditor can resume garnishing your wages once the stay is lifted.

Need Help With Bankruptcy?

If you need a Smithfield bankruptcy attorney to help you explore your options for debt relief and an end to wage garnishment, Narron Wenzel, P.A. is here to help. Our attorneys are on your side, and will help you understand whether bankruptcy is right for you. Contact us online or call now, and take the first step toward a brighter financial future in Smithfield.

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