Wage garnishment is one of many options that certain creditors have for compelling debtors to pay what they owe. Fortunately, filing for bankruptcy may prevent your creditors from pursuing further wage garnishment actions against you. Understanding how this process works is where having a dedicated bankruptcy attorney is essential. If you’re saddled by debt and are facing a wage garnishment, Toronjo & Prosser Law can help explore whether bankruptcy is an option for you.
What Is Wage Garnishment?
If a creditor is unsuccessful in collecting on a debt that you owe, it may be able to garnish your wages. In many (but not all) cases, this begins when the creditor goes to court and obtains a judgment declaring what you owe. As part of its various tools for collecting on the debt, the creditor may also secure a wage garnishment order. This is an order from the court for your employer to withhold a portion of your paycheck and send it directly to the creditor.
In Texas, most creditors cannot garnish your wages. However, there are exceptions. The only debts for which a creditor may obtain a wage garnishment order i Texas are:
- Taxes and fines
- Alimony
- Child support
- Student loans
It’s important to point out that there are limits in both state and federal law as to how much of your wages a creditor may garnish. Nonetheless, a wage garnishment order will almost certainly cause numerous complications that go beyond having your wages taken.
Disadvantages
For many reasons, you don’t want your wages being subjected to a garnishment action. These are among the most serious disadvantages of a wage garnishment:
An order may not be required. If a spouse or the other parent wishes to garnish your wages for alimony or child support, that person will need to obtain a court judgment to do so. However, the government is not required to obtain a court judgment to garnish your wages for unpaid taxes and student loans. This means you may be deprived of advance warning before realizing your earnings are being taken.
Your employer is required to honor valid garnishment notices. As mentioned above, there are only certain types of debts that can be subjected to wage garnishment. If your employer receives a request to garnish your wages for a credit card debt, for instance, it is generally not required to honor it. But if the garnishment is for something mentioned above, your employer will have to garnish your wages.
There are varying limits to how much can be garnished. Different types of debt have different caps on how much of your wages may be garnished to satisfy it. For example, the government can only withhold up to 15% of your disposable income for student loans that are in default, but no more than 30 times the federal minimum wage. However, up to 50% of your wages may be garnished for unpaid child support and alimony.
Your creditor may have other options. Just because a creditor cannot garnish your wages for unpaid consumer debt doesn’t mean there aren’t other available methods that can be equally frustrating. For instance, a creditor can still seize your other assets, including money in your bank account. In other words, garnishment may not be the only thing threatening your livelihood if you owe on an old debt.
Can I Be Fired For A Wage Garnishment?
Employers who have to garnish wages to send to creditors may not want to deal with the hassle of doing so and might prefer to terminate you instead. However, both federal and state laws provide protections against this. Federal law prohibits your employer from firing you over one wage garnishment, but not if you have additional or repeat ones.
Texas law goes even further. Your employer cannot discipline, fire, or refuse to hire you because you have a wage garnishment. If your employer does so, you may have cause for a separate legal action outside of bankruptcy.
Can Bankruptcy Stop Wage Garnishment?
Bankruptcy generally prevents creditors from continuing to pursue certain collection actions, such as wage garnishment. This is done by way of the automatic stay, a court order that goes into effect when you file for bankruptcy.
However, not all debts will be immediately halted because of the automatic stay. Child support and alimony are considered to be priority debts that fall outside of the automatic stay, meaning that you still may be required to pay on them even with bankruptcy. Also, depending on the debt, your creditor could be able to convince the bankruptcy judge to lift the automatic stay and continue collection actions against you.
So for many debts, the answer is yes, bankruptcy can at least temporarily stop the wage garnishment. Filing for bankruptcy can also help you get your finances in order, resolve old debts, and free up your money to pay down things like child support that can be garnished. The truth is, while no one likes to have to file for bankruptcy, it allows for many debtors to have a fresh start so they can start to move forward with their lives.
Does a Wage Garnishment Go on Your Credit Report?
No, a wage garnishment itself won’t be listed on your Texas credit report. However, the underlying debt that led to the garnishment will likely be there, and late payments or default on that debt can significantly impact your credit score. Remember, even though it’s not directly listed, a garnishment might still raise red flags for lenders.
Explore Your Options With Us Today
Dealing with debt is bad enough, but wage garnishment can make it much more difficult. Whether your creditors are threatening to garnish your wages or the process has already begun, bankruptcy may provide you the peace of mind you’ve been looking for. Talk to the experienced team at Toronjo & Prosser Law today.