Have you received notice that you’re facing wage garnishment? That can be a scary thing – depending on the creditor, it may mean losing half of your income or more. Your employer is bound by law to go ahead with the garnishment, so you can’t stop it by appealing to them. So, what can you do?
First, read the notice of wage garnishment carefully. You need to know who the creditor is and you need to take note of all the deadlines for filing appeals or claiming exemptions. Next, consider the rest of your finances. Some income is exempt from garnishment – Social Security benefits, disability insurance, and payments from other government programs. In addition, California law protects $320 per week from garnishment, regardless of where it comes from. You’ll need to start collecting documentation about the source and amount of your income so you can prove how much is exempt.
Now, it’s time to start fighting against the wage garnishment.
Challenging A Wage Garnishment Order By A Judgment Creditor
A “judgment creditor” is a creditor that has sued you for collection and now has a legal judgment against you for the debt. It may be medical debt, credit card debt, a personal loan, or another type of debt – the process is the same. You may be able to avoid the risk of wage garnishment (and even have the debt wiped out) if you fight that lawsuit in the first place. If they already have a judgment against you, they’ll have to go through another legal process to actually start garnishing your wages.
First, the creditor will need to fill out several legal forms, including a Write of Execution, an Application for Earnings Withholding Order, and an Earnings Withholding Order. They’ll file copies of those forms with the court and hire a process server to take copies to the agency that handles garnishment in your count (usually the Sheriff’s office) and to your employer. Cal. Civ. Code § 706.101, 103. Then, your employer has to notify you of the order within 10 days. Id. § 706.104.
Once you get the order, you have the opportunity to claim an exemption. The order itself will include instructions and a deadline for claiming an exemption. Make sure you file by the deadline or you may lose your opportunity to fight the garnishment. Typically, you’ll need to include all the relevant information about your case, the reason you’re claiming an exemption, a financial statement, and your signature. You may want to include supporting documents like pay stubs and bank statements.
There are two main exemptions available for wage garnishment at this stage. First, you can claim that there was never a hearing about the debt. Second, you can claim that your financial circumstances have materially changed (perhaps you lost your job or gained a dependent) since the last hearing. Id. § 706.105. Essentially, you’re arguing that you need all of the money you’re making to support yourself and your dependents.
Once you’ve filed the objection, your creditor has 10 days to respond. Cal. Civ. Code § 706.105(e). If they don’t, the wage garnishment order will be terminated. If they do, there will be a hearing to determine how much, if any, of your income is exempt. At the hearing, remember that you’re arguing against the garnishment order, not the original debt. Bring in pay stubs, bank statements, records of your car and rent or mortgage payments, and other financial documents to support your case. The court may decide to lower the garnishment or wipe it out altogether, or it may decide that the original order will stand.
If you can’t get out of wage garnishment by claiming an exemption, you have another option: bankruptcy. When you file a bankruptcy, all collection actions must stop and all creditors have to deal with you through the bankruptcy court. You may be able to wipe out the debts entirely and avoid garnishment altogether. Bankruptcy is hard on your credit score, but so is garnishment, and bankruptcy can help you get out of debt altogether.
Tax And Student Loan Debts
As far as debt collection goes, the government doesn’t have the same restrictions as other types of creditors. Most importantly, they can garnish your wages directly without having a lawsuit or hearing first. The IRS will give you notice that you owe a tax debt first and if you don’t either pay or prove that you don’t owe the money, they’ll give you notice that they’re going to garnish your wages. That notice will include a form and instructions for claiming an exemption. The state of California follows a similar procedure and will give you notice that you owe a debt. You can then make a “timely request” that they review the decision (meaning you should do it right away) and provide them with documentation to show why you shouldn’t owe the debt. If that doesn’t convince them, they’ll give you notice that they intend to garnish your wages. You then have 30 days to claim an exemption or ask for a review of the order, and they won’t start withholding your earnings until that review is completed. Cal. Civ. Code § 706.072.
If your student loan debts are in default, you’ll receive at least 30 days’ notice before they start to garnish your wages. You can then request hardship assistance, which may involve deferment, forbearance, or a new payment plan. You can also send in a written objection requesting a hearing to explain your situation.
Get Help With Wage Garnishment
If you’re faced with wage garnishment, the best thing you can do is be proactive about fighting it. Gather all of your financial information to show that you’ve already paid the debt, that your income is exempt, or that you and your dependents can’t afford the garnishment. Make sure to meet all of the deadlines – being even a day late will cost you your chance to stop your creditors. Remember that wage garnishment often comes with levies of your bank accounts and liens on your other property, so you’ll need to keep an eye out for those notices, as well. You may also want to consider pulling non-exempt money out of your bank account in order to avoid losing access to it in the event of a levy.
Even if you can’t stop wage garnishment by objecting or filing an exemption, you always have the option to file a bankruptcy. That will stop the collection and allow you to wipe out many of your debts. If you’re interested in learning more about how to deal with garnishment or how bankruptcy may be able to help you with your debts, contact us today for a free consultation with one of our experienced attorneys.
Barry Edward Borowitz is the founding partner of Borowitz & Clark, LLP, a leading bankruptcy law firm that represents clients petitioning for bankruptcy protection under Chapter 7 and Chapter 13 of the bankruptcy code. Mr. Borowitz has been practicing bankruptcy law exclusively for more than 15 years. View his full profile here.