Wage garnishment can be disastrous for individuals and families who are already struggling to make ends meet. To garnish wages most creditors must file a lawsuit against you and obtained a judgment. By the time wages are garnished your employer has been notified of the judgment and must deduct money from your paycheck and relinquish it to your creditor.
Filing for bankruptcy puts an immediate end to wage garnishment.
What is Wage Garnishment?
Wage garnishment is when money is taken directly out of your paycheck before you receive it, and sent to your creditor.
The Wage Garnishment Order is an order from the court that is sent to your employer. Your employer is required to comply with the order and must withhold a certain amount of money from your paycheck and then send that money directly to your creditor.
This is a powerful collection method available to creditors; however, creditors must go through a specific process to be able to garnish wages.
When Can A Creditor Garnish Wages?
Most creditors, including creditors of credit card and medical debt, cannot garnish your wages until they bring a lawsuit against you for unpaid debt and obtain a judgment. When a creditor sues you, they must properly serve you and give you notice of the lawsuit. When you are sued, you are given time to respond to the lawsuit. If you do not respond, the creditor can seek a “Default Judgment” against you.
If a creditor obtains a judgment (or default judgment) against you, it means the court has determined that your creditor is entitled to a specific amount of money from you. With a judgment, your creditor can then get a wage garnishment order.
Some Creditors Do Not Need A Court Judgment To Garnish Wages
While most creditors must go through the above-outlined court process before they can garnish wages, some creditors do not. Wages can be garnished without a court judgment for unpaid income taxes, defaulted federal student loans, and court-ordered child or spousal support.
Limits on Wage Garnishment in Georgia
Public policy on wage garnishment considers that you should have enough of your wages left to pay for basic living expenses. Therefore, there are limits to how much money can be garnished from each paycheck. In regard to judgment creditors, Georgia follows the federal law limits placed on wage garnishments.
Creditors with a judgment against you (judgment creditors), can garnish:
- Up to 25% of disposable earnings for that week; or
- The amount by which your disposable earnings exceed 30% of federal minimum wage.
Disposable earnings are wages left after your employer has made deductions required by law. Deductions mandated by law include federal, state, and local taxes, social security, and state unemployment withholdings.
The restrictions on garnishments are codified in 15 U.S. Code §1673. To calculate how much of your wages can be garnished, use the Administrative Wage Garnishment (AWG) Garnishment Calculator provided by the U.S. Department of Treasury, Bureau of the Fiscal Service here.
Note that the amount that can be legally garnished without a court judgment for unpaid income taxes, defaulted federal student loans, and court-ordered child or spousal support is different than for judgment creditors. Contact us for a free consultation to discuss the specifics of your wage garnishment.
Bankruptcy Stops Wage Garnishment
Filing for bankruptcy stops wage garnishment immediately. In fact, bankruptcy is a powerful tool that stops all collection actions against you. As soon as you file for bankruptcy protection, your creditors are not allowed to:
- Garnish wages
- Levy bank accounts
- Call you or send you bills
- Sue you for unpaid debts
- Move forward with pending lawsuits
- Repossess your car (at least not right away)
- Foreclose on your home (at least not right away)
We want you to know your rights. Read our articles Bankruptcy Stops Collection Action and The Power of the Automatic Stay and How It Helps You.
To discuss your financial situation and whether or not bankruptcy is the right choice for you contact us or call (912) 351-9000 for a free consultation. For over 35 years, Braziel Law has proudly served the people of Savannah, GA and the surrounding areas.