Common Reasons For Wage Garnishment

Wage garnishment is a legal process where a portion of your paycheck is withheld to satisfy a debt. This situation can be stressful, especially when you’re already dealing with financial difficulties. However, it helps to know the common reasons wage garnishment occurs, so you can better understand your situation and what options are available.

Unpaid Taxes

One of the most common reasons for wage garnishment is unpaid taxes. If you owe federal, state, or local taxes and fail to pay them on time, the government can garnish your wages to recover the amount owed. The IRS or state tax agencies typically do not need a court order to begin garnishing your wages. They will notify you of the unpaid amount and give you a deadline to resolve it. If you don’t act within that time, garnishment may begin.

The amount the government can garnish for unpaid taxes is often higher than for other types of debt, leaving you with less income until the debt is resolved. However, payment plans or other arrangements can sometimes be made to avoid garnishment.

Defaulted Student Loans

If you have federal student loans and fall behind on your payments, wage garnishment may be used to recover the debt. In this case, the Department of Education can garnish your wages without needing to take you to court. Typically, they can garnish up to 15% of your disposable income.

It’s important to respond to any notices from the Department of Education and explore options such as income-driven repayment plans or loan rehabilitation programs to avoid garnishment. Attorneys can attest to the importance of addressing student loan issues promptly to prevent further financial hardship.

Child Support And Alimony

Another common reason for wage garnishment is unpaid child support or alimony. If a court has ordered you to make child support or alimony payments and you fall behind, your wages can be garnished to cover the overdue amount. The garnishment for child support is usually higher than for other debts, with up to 60% of your disposable income being subject to garnishment, depending on your situation.

Child support and alimony garnishments typically remain in place until the debt is paid off or a new payment arrangement is made through the courts.

Judgment For Unpaid Debts

If a creditor wins a lawsuit against you for unpaid debts, such as credit card bills, medical bills, or personal loans, they may obtain a court order allowing them to garnish your wages. This type of garnishment is known as a judgment garnishment. Creditors must go through the court system to get approval before they can garnish your wages for these types of debts.

Once the court grants the creditor’s request, they can begin withholding a portion of your paycheck until the debt is satisfied. However, the amount they can garnish is usually limited to a percentage of your disposable income, protecting a portion of your earnings.

Bankruptcy

Filing for bankruptcy can sometimes result in wage garnishment as well, especially in Chapter 13 bankruptcy, where your income is used to pay down your debts over time. However, in many cases, filing for bankruptcy actually halts wage garnishment, giving you a chance to restructure your debts and stop the garnishment process. A garnishment lawyer can help determine the best course of action based on your specific financial situation.

Court-Ordered Fines And Fees

In some cases, wage garnishment may be used to collect unpaid court-ordered fines and fees. This could include fines for traffic violations, criminal cases, or other legal matters where the court has imposed financial penalties. Failure to pay these fines can result in garnishment until the total amount is collected.

Wage garnishment can happen for a variety of reasons, from unpaid taxes and student loans to child support and court judgments. Understanding the common reasons for wage garnishment can help you address the issue and seek legal or financial assistance before it leads to more significant financial challenges. Our friends at Wright Law Offices discuss how taking proactive steps, such as setting up payment plans or exploring legal options, can help protect your income and reduce the impact of garnishment.