Because a hearing must be scheduled, in most cases it takes at least several weeks. Notification Creditors must obtain a court judgment to garnish wages. State law varies so the process for obtaining a judgment depends on the state.
The creditor files the lawsuit in your county, or district, court. The court then gives the creditor a case number and a trial date, by which time the plaintiff must notify you of the lawsuit via a court approved method. For example, the creditor might be required to notify you at least 10 days before the trial date, which may be three to four weeks after the creditor filed the lawsuit. If the creditor wins the case, it receives a judgment against you. Post Judgment.
The court might mandate that the creditor send you a notice of court proceedings to collect the debt. The creditor must then wait for a specific period , such as 15 days after the mailing, before filing the wage garnishment.
Depending on your state, the court may allow the creditor to file the garnishment after it obtains the judgment, without notifying you first. The sheriff or other local official serves your employer with the garnishment.
For example, the answer might be due within 30 days of receipt of the garnishment. In the answer, your employer says whether you are employed with the company, and if so, your rate of pay, the amount that will be submitted each payday, and any previous garnishments against you. Statute of Limitations Each state has its own statute of limitations that governs the length of the judgment.
For example, the creditor may have 20 years to act on the judgment, so it must garnish within that period. Keeping that in mind, the garnishment may last until the debt is paid in full; or it may expire after a specific period, such as 60 or 90 days later, at which time it might be renewed if the debit is not paid off. In the latter case, court costs are added to the debt each time it is renewed.
The length of the garnishment depends on the amount of your debt and the amount your employer is required to withhold each pay period.
Government Debts. Government agencies, such as the Internal Revenue Service and the U. Department of Education, do not need a court order to garnish wages. However, they must take certain steps to implement the garnishment. For example, before levying your wages for delinquent taxes, the IRS sends you a levy notice at least 30 days prior to the levy. You may request a hearing to plea your case within 30 days of the levy notice. If a creditor is garnishing your wages to pay off a money judgment, tax debt, or student loan obligation, you probably want to know when the wage garnishment will end.
File a Claim of Exemption In certain circumstances, states allow you to protect some of your wages with laws called exemptions. Chapter 7 and 13 each offer different ways to take care of the debt. Many debts can be wiped out in three to four months, such as credit card balances, medical bills, and personal loans.
Not all debts can be discharged in bankruptcy. For instance, many tax debts and all support arrearages will remain your responsibility. Fortunately, procedures exist for negotiating tax debt with the IRS, and there are ways to challenge a student loan wage garnishment. Pay the Debt and Stop the Garnishment Sometimes it makes sense to pay off what you owe. Here are two options. For that reason, the creditor might agree to settle the debt for less than the amount you owe.
If you can get some cash to settle the debt, the garnishment will end. A significant interest rate will make the underlying debt that much more difficult to pay off. Unfortunately, this is rarely the case. A sizeable principal balance combined with a substantial interest rate means that you might find it hard to pay off the balance without significant financial difficulty. The duration for garnishment to last solely depends on the laws of your state, and the method that the creditor uses to try and collect on that judgment.
In other states, it can be twenty years or longer. This amount is sent to the creditor to reduce the total balance owed. Under state law, a so-called bank levy typically requires a separate order from the court. Most wage garnishments start when a creditor - like a credit card company or bank - sues a customer for nonpayment. This includes banks that sue homeowners after a foreclosure. If they win in court, they get a judgment against the person.
The judgment in turn gives them the ability to get a garnishment order. Before the creditor or collection agency can get a garnishment order, they have to get a judgment. In other words, they have to win the lawsuit. Consider signing up for a free credit counseling session with a nonprofit near you as well.
If you do ignore the lawsuit, that is it will just speed up the inevitable. Federal law provides that your wages and your social security benefits can be garnished for back taxes and student loan debt. This means the Department of Education and the IRS can garnish your wages without first filing a lawsuit or getting a judgment. To avoid a default judgment, make sure to answer the lawsuit. The best way to find out how much the filing fee for an answer is is to contact the court directly.
Once your answer has been filed, the court can no longer enter a default judgment against you. This will buy you a little bit of time to negotiate a repayment plan with the creditor. Let them know what you can afford to pay every month, or how much you can afford to pay for a debt settlement. Now, the creditor has a court order that says they get a certain amount of money from your wages every pay period.
If you plan on doing this, make sure you act quickly. Depending on your state, you may have as little as 5 business days to file a claim of exemption or similar paperwork. In that case, consider the pros and cons of Chapter 7 bankruptcy. If it makes sense for you to file bankruptcy, know that once your case has been filed, the wage garnishment has to stop. And if the debt for which you are being garnished is dischargeable like a credit card debt or an old car loan, then it will be erased in the bankruptcy process , which ends the garnishment permanently.
Even though the automatic stay stops most collection activities, there are a few exceptions. One of these exceptions is wage garnishment for child support and alimony. Garnishment orders are issued by the court. What states allow wage garnishment? At present four U. What happens when a levy is placed on your bank account? A bank levy is a legal action that allows creditors to take funds from your bank account.
Your bank freezes funds in your account , and the bank is required to send that money to creditors to satisfy your debt. Doing so can prevent it or reduce the amount of money creditors can take from your account. How many times can the IRS levy your bank account? The IRS can levy it a bank account more than once. When the IRS levy's you, it is not a standing levy , which means you can deposit money the next day. An IRS bank levy attaches to funds once the bank processes the tax levy.
Can the IRS garnish wages? If you owe taxes to the IRS , it can garnish your wages to collect. But there are payment options for you to avoid garnishment. Unlike most other creditors, however, the IRS can garnish your wages without first getting a judgment, and the amount it can take is usually more than what regular creditors can take. Can your federal tax refund be garnished? Private creditors can 't garnish your federal tax refund. Your federal tax refund may be offset to pay for child support or a past due federal student loan.
Does wage garnishment come out of every paycheck? Paycheck deductions are amounts withheld from a worker's regular paycheck , often for things such as approved pension contributions or health care expenses. Wage garnishment allows a creditor who obtains a court order to require your employer to set aside part of your paycheck and send this directly to your creditor.
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