How Does Wage Garnishment Work?

When people are overwhelmed with debt and cannot pay their bills, they may be tempted to ignore letters and calls from creditors. They also may believe that there is no point in opening the bills if they simply do not have the money to pay them. However, ignoring debt problems will not make them go away, and people can run into serious trouble by avoiding debt collection issues. Creditors may proceed with collection efforts such as wage garnishment if a debt collection issue is not resolved. Tennessee residents should understand how garnishment works and some ways to avoid wage garnishment.

How Does Garnishment Work?

If a person is unable to pay a debt, such as a credit card debt or a medical bill, the creditor may choose to initiate legal proceedings to collect the debt. The creditor may file a lawsuit to obtain a judgment against the debtor. If the judges rules in favor of the creditor and finds that the person owes the creditor money, the court will issue a judgment in favor of the creditor against the person who owes money in the amount that the person owes.

When a creditor has a court judgment against a person, one of the ways the creditor can satisfy the judgment is by garnishing the debtor's wages. The creditor files paperwork with the debtor's employer and the employer withholds a certain amount of the debtor's wages from each paycheck and sends the money to the creditor to pay off the debt.

Federal law allows garnishment of only 25 percent of a person's disposable income, which is the amount a person has left after the legally required deductions are subtracted from a person's paycheck, for most judgments. The law allows more to be taken from the paychecks of those with unpaid taxes or child support debts.

Tennessee law exempts an additional $2.50 for each child under age 18 who lives in the debtor's home from garnishment. Tennessee law puts a 10 year limit on the time that a creditor can collect on a judgment after the court issues it, even if the creditor has not collected the full amount of the debt through garnishment or other collection actions.

How Can People Avoid Garnishment?

People can take action to avoid wage garnishment. The first step to avoid wage garnishment is to contact creditors. In some cases, creditors are willing to work with people to arrange extended repayment plans or waive late fees and other penalties that have accrued. Creditors often prefer to get some money for the debt, even if it is not the full amount, than none at all.

However, when creditors are inflexible, people may want to consider bankruptcy as an option. After a person files a bankruptcy petition, the court automatically issues a stay on all collection actions by creditors.

Talk to an Attorney

Facing wage garnishment can be distressing for those already in financial trouble because it lessens the amount of money they take home in each paycheck, making them fall further behind in their bills. If you are having issues with wage garnishment, talk to an experienced bankruptcy attorney to discuss your options.