If you owe money to a company, or, in some cases, to an individual, and have made no effort to pay your debt, the creditor may threaten to garnish your wages. This is a common way for creditors to collect on unpaid debts, however, there are specific laws and rules surrounding the wage garnishment process. If you are facing wage garnishment, do not wait, hoping it will go away.
Take action now by contacting a Horwitz & Horwitz attorney who can identify every potential solution, helping you choose the best option for you then guiding you through the process. Our attorneys have 45 years of combined experience helping people just like you who may not fully understand wage garnishment or how a creditor goes about garnishing wages. We will work hard to protect your rights and your future while helping you through this difficult issue.
What is Wage Garnishment?
An Ohio wage garnishment is a legal process where a creditor with a financial judgment against you can collect that amount by taking part of the normal monthly wages you receive from your employer. Child support, consumer debts and student loans are the most common sources of wage garnishment. Wages can be garnished until the debts is paid off, or otherwise resolved. Wage garnishment is more common than you might think.
According to a 2013 CBS News report, as many as 7.2 percent of working Americans have had their wages garnered. While about 40 percent of those wage garnishments were for child support, tax debts accounted for about 20 percent, followed by credit card debt. It is important to remember that you have legal rights regarding wage garnishment, including caps on how much can be taken out of each check. A knowledgeable Horwitz & Horwitz attorney can help you take steps to stop a wage garnishment, or, at a minimum, lessen the effects.
Who Can Garnish Wages?
Generally speaking, almost any creditor can garnish your wages, although many creditors must meet certain requirements prior to a garnishment. Specifically, a lawsuit must be filed with a resulting financial judgement and court order to garnish wages. Most types of debt, including those related to credit card and medical bills, is not subject to immediate garnishment if you stop paying your bill. The creditor must go through the proper channels by filing a lawsuit and obtaining a court order.
Some creditors are not required to go through the trial process prior to garnishing wages. Child support orders automatically include a wage withholding order, meaning if you stop paying court-ordered child support, no additional court action is required to garnish your wages. Alimony obligations are the same and the limits (how much can be taken from your paycheck) for child support and alimony are much higher than for other debts. If you owe back taxes to the IRS, your wages can be garnished without benefit of a court order and the U.S. Department of Education can also garnish your wages via an “administrative garnishment.”
Under federal law, only one creditor can lay claim to your wages at a time. In other words, whichever creditor files first is the one that will be allowed to garnish your paycheck; other credits must wait their turn. If you are in a situation where one or more creditors are threatening to garnish your paycheck, you need immediate help in the form of a Horwitz & Horwitz attorney who can assess your situation, helping you determine the best solution for you and your family.
How Long Before a Creditor Can Garnish Your Wages?
For debts that must go through the court process prior to garnishment, the process could take a while. First, when you miss your minimum monthly payment, you will be contacted, via letters, phone calls, or both. Usually, the company will attempt to work out a payment plan with you. If that doesn’t happen, and you continue missing payments, then your debt may be turned over to a debt collector. This process usually takes from 3-6 months from your first missed payment. The debt collectors will begin contacting you—sometimes multiple times per day. If you can’t or won’t pay, the collection company will sue you (you will have 28 days to respond) with a goal of obtaining a court judgment that will allow them to garnish your wages.
If a judgment is obtained, you will receive a letter between 15 and 45 days following the decision that tells you to pay the debt or expect wage garnishment. If you do not pay, your employer will receive a court order stating that a specific amount of your wages will be withheld from your monthly check. Wage garnishment resulting from non-payment of child support can happen fairly quickly, however, non-payment of taxes or student loans have a process that can take several months.
Is Any Income Exempt from Wage Garnishment?
Depending on your specific situation, as well as your income level, some of your income may be exempt from wage garnishment. In general, the following types of income are exempt from garnishment:
- Child Support
- Retirement benefits and pensions
- Veterans’ benefits
- Disability payments
- Social Security
Income from low-income earners that have little to no disposable income could also be exempt from garnishment. The best way to determine whether you have income that is exempt from garnishment is to speak to an experienced Horwitz & Horwitz attorney who can look at your situation as a whole, then provide solid legal direction.
How Much Money Can Wage Garnishment Take?
In the state of Ohio, a debt collector is only allowed to garnish up to 25 percent of your non-exempt wages and that applies to disposable income. Disposable income is the amount of your wages left after all required deductions such as taxes and Social Security contributions are taken out. Deductions that are not required by law, such as those to life insurance or a pension, remain a part of your gross income, even when they are directly removed from your paycheck.
If you are paying child support, that 25 percent may be lowered even more to allow you to continue to meet your child support obligations. The IRS can only take 25 percent of your disposable income, and your student loan holder can only take 15 percent. Compared to consumer protections in other states regarding wage garnishment, Ohio falls somewhere in the middle. A person earning minimum wage would be left with only about $235 per week after a 25 percent wage garnishment.
How Can I Avoid Wage Garnishment in Centerville, Ohio?
Essentially, to avoid wage garnishment, you can either pay the debt, you can apply for a city or county trustee to manage your debt repayment, or you can retain a credit counseling firm. When you apply for a trustee, you will make voluntary payments to that person (in the amount wage garnishment would have taken). The trustee will then distribute the money among your creditors until your debts are paid in full. When you opt for a credit counseling service, a payment plan will be negotiated on your behalf.
Creditors that agree to the plan cannot garnish your wages unless you stop paying on the payment plan. In the big picture, it could be a better option for you to file for bankruptcy, depending on the type of debt you owe (child support, alimony, student load debt, and tax debt cannot be discharged in bankruptcy). The Horwitz & Horwitz attorneys will be with you from start to finish, helping you get out of the financial hole you are in. We do not delegate your case to paralegals or assistants—when you call, you will speak to one of our two highly experienced attorneys.
What are Wage Garnishment Objections?
If you believe you do not owe the debt, or if you believe your creditors are acting inappropriately or illegally, you can object to an Ohio wage garnishment. There are many reasons you might want to file a written objection with the court, including:
- There is too much money being withheld from your paycheck
- The fact that you pay child support was not taken into consideration
- Your creditor failed to follow proper procedure, i.e., you were not sent a demand letter
- Your debt has been paid in full, but the wage garnishment is continuing
What Happens After Your Wage Garnishment Order Has Been Fully Satisfied?
While you might assume your wage garnishment will end once your debt is paid in full, this is not always the case. The creditor should notify your employer to stop deductions for the debt once it is paid in full, but your creditor may or may not do that. You must keep very careful records, then once you have paid your debt in full, notify your creditor that your debt is satisfied. If the creditor believes otherwise, you may need to consult a knowledgeable Horwitz & Horwitz attorney.
How Bankruptcy Might Be the Route to Go and Why Speaking to a Horwitz & Horwitz Attorney Can Be Beneficial
If you are facing collections and wage garnishment, you may feel you are out of options. It could be a better option for you to file for Ohio bankruptcy than to wait until your wages are garnished or your bank account is raided. Once you file for bankruptcy you will be afforded the protection of the automatic stay, meaning your creditors are no longer allowed to attempt to collect your debts, and even a foreclosure process can be halted. Bankruptcy might be the right choice to help you get your finances back on track. If you are struggling with debt, speak with an experienced bankruptcy attorney from Horwitz & Horwitz. We are always upfront, offering only straightforward advice. We will never make promises we can’t keep, and we will ensure you understand all the risks and benefits associated with bankruptcy. We want to help you protect your finances today as well as your financial future. Contact Horwitz & Horwitz today.