Understanding Wage Garnishment and Bankruptcy

Creditors have many methods available to help them collect on debts. One of the methods is wage garnishment. A wage garnishment compels your employer to withhold a portion of your pay that goes toward the reduction of your debt. Wage garnishment can naturally put a bind on a person already struggling financially.   Find out how wage garnishment works, especially related to bankruptcy. 
Wage Garnishment Lawsuit  Georgia follows federal law regarding wage garnishment. According to federal law, creditors cannot enact wage garnishment the moment you miss your first payment. Rather, they must get a money judgment from the courts.  To obtain a money judgment, the creditors must file a collection lawsuit in court. They must argue their case and win it. When they've done so, they get awarded a money judgment, which is a statement legally testifying that you owe that creditor money. They can then contact your employer and enact the wage garnishment. 
Wage Garnishments Amounts  Federal law also dictates how much the courts can order in wage garnishment. The goal isn't to take all of your money but rather settle your debts while affording you enough money for living expenses.  The money judgment creditor can file for 25 percent of your disposable earnings. However, they can also use another formula with your disposable earnings minus 30 times the current federal minimum wage, as figured in a weekly sum. If your disposable earnings fall within a predetermined category, they can garnish an amount within that range.   The employer is only required to garnish the lesser amount between the two figures. 
Wage Garnishment and Your Job  Debtors often worry that a wage garnishment will jeopardize their job, which will obviously put even harder financial difficulties on them. However, Georgia law doesn't allow an employer to fire you because of one wage garnishment. The challenge comes if you face two or more garnishments. In that case, the employer can terminate your employment. 
Wage Garnishment Challenge  You're not helpless in the wage garnishment scenario. If creditors start filing lawsuits against you with the aim of earning a money judgment, you can hire legal help. The creditors must inform you of their money judgment before they seek garnishment. Therefore, you'll have time to challenge the judgment. 
Attorneys can help you with that challenge. They might be able to negotiate with your creditors to enter into a payment agreement on your behalf. You'll be beholden to that agreement, but it often represents less payment than the wage garnishment. What's more, it keeps your employer out of your finances. 
Wage Garnishment and Bankruptcy   When you file for bankruptcy, the courts award you an automatic stay. The stay is an injunction that legally prevents creditors from attempting to collect on your debt. They can no longer call you or send you mail. They also can no longer file lawsuits against you to obtain the money judgment. And if they've already received the money judgment, they can't use it to garnish your wages.  If you've already gotten to the wage garnishment stage, you can still file for bankruptcy. At that point, your employer can no longer withhold wages to pay your creditors. The creditors might file to have the garnishment continue, but the courts only award that in special circumstances. In some cases, you may even be eligible to receive some wages back from the garnishment. 
Wage Garnishment Exemptions  The courts consider certain debt above the rules. Not only are these debts not available for the automatic stay, the debtors don't even have to file for a money judgment. These debts include child support, defaulted student loans, and unpaid taxes.  With child support, between 50 percent and 60 percent of your disposable earnings are eligible for garnishment. For student loans, the collection entity is entitled to an amount up to 15 percent of your disposable income. With unpaid taxes, the federal and state government can deduct your back taxes from your wages.  If you're facing wage garnishment issues and want to explore your challenge and bankruptcy options, contact Custer, Custer & Clark, LLC, Attorneys at Law.