Can Your Creditors Garnish Your Wages To Pay Your Credit Card Bills?
Not paying your bills on time is a major issue. Your issue becomes compounded when you decide not to pay the bill at all. Your creditors are not going to simply hope you make a payment. They are going to take action to get their money. It is possible that your wages could be garnished to pay your creditors if you have credit card debt. However, there is a process that must be followed.
Creditors Must Get Authority First
Your creditors cannot simply go into your bank account and take your money. They must first file a lawsuit against you. A judge then has to rule in favor of your creditors in court. Only then can your creditors begin the process of garnishing your wages.
It is important to know that your creditors must first take these steps. Some creditors may try to garnish your wages without first going to court. This can open up the door for you to stop your wages from being garnished.
Creditors are also not able to threaten you with garnishment until they actually win a judgement. It is also illegal in most cases to threaten a lawsuit when they do not actually intend to sue. This can be construed as creditor harassment.
Certain types of income will be protected in the event that your wages are garnished. Social security, disability and alimony payments are usually exempt for garnishment for repayment of credit card debt.
How Much Can Be Garnished
Just because a creditor has received the right to garnish doesn’t mean they can take as much as they want. Only discretionary income is allowed to be taken away from you. In most cases, creditors can take 25 percent of any amount over $260.
Employers must still withhold social security taxes, federal withholding and unemployment insurance from an employee’s paycheck. Wages can then be garnished from the rest of eligible pay.
Your state may have garnishment laws that differ from federal laws. For example, Ohio and New York force creditors to give debtors a grace period before garnishing wages. Other states may exempt more income from garnishment.
Wage Garnishment Can Impact Your Credit
Having your wages garnished will do more than just lower your take-home pay. The judgement that was entered against you will go on your credit report. This could make you less attractive to lenders in the future as well as employers.
What lenders will see is that you were unable to pay your debts even though your had a job. Some lenders may interpret a judgement against you as an unwillingness to pay as opposed to an inability to pay. This will make lenders even more leery of loaning money to you in the future.
Wage garnishment also means you were not able to make payments on time. Missed payments are going to hammer your credit score. It is important to know that making payments on time will make up roughly a third of your overall credit score.
You can avoid a wage garnishment by making payment arrangements with your creditors. A debt settlement could be a good way to reorganize your finances.
Your paycheck can be garnished in the event you don’t make payments on your credit cards. However, do not panic if you find out your wages are being garnished. Verify that a judgement has in fact been against you in court. If not, you can take steps to invalidate the garnishment. Otherwise, be ready to have up to a quarter of your disposable income taken out of your check before you even get it. Call the National Debt Relief Group before your debt problems get this far. Avoid wage garnishment by resolving your debts now.