When you fall behind on payments, your creditors may try to implement a wage garnishment to get you to pay the debt. Different states have different laws applying to wage garnishments, but all employers must follow federal laws in this matter. At first, it may seem like a good thing since you will make your payments without ever having to deal with the money yourself. However, there are several wage garnishments details that are not so pleasant.
Risk of Unlimited Garnishments
Your creditors track your financial activities. They can see when you apply for loans and may be able to see the information you used when applying for those loans. This makes them more willing to take action on your debts, which can lead to multiple garnishments. The laws do not limit how many garnishments can be in place at one time, but they do limit the percentage of your total paycheck that can be garnished.
Gross Income and Garnished Wages
When you are involved in a wage garnishment, creditors are limited to how much they can take out of your paycheck. This limitation is an estimate based on your gross income. However, this method does not account for anything else you have taken out of your check. If your garnishment is 10 percent, that is 10 percent of your gross income regardless of your other day-to-day bills and expenses. Other things to keep in mind include the following:
- Gross income does not account for child support payments. For more information on child support, click here.
- Gross income does not account for health insurance costs.
- Estimated income amounts do not account for any automatic withdrawals or garnishments that are already taken from your paycheck.
Are There Advantages of Wage Garnishment?
The only real advantage of wage garnishment is that you don’t have to take the time to make the payments to your creditor yourself. You may even feel as though you are coming out ahead because you no longer have to worry about processing fees, and the payments will be made automatically and on time. However, the truth is that you are most likely paying fees that are included in the total amount to be garnished from your check. You also need to monitor the progress so they do not take more than you owe them.
Simultaneously, wage garnishment can be an embarrassing matter that you might not want your employer or human resources department to know about. In certain cases, we can help you deal with garnished wages and may be able to help you avoid this process altogether. If your wages are going to be garnished and you have questions about your rights, contact our office.
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