Many debtors going through financial difficulties may have questions about wage garnishments, what they are, what wages can be garnished and if bankruptcy protects you from the garnishment? The rules surrounding wage garnishments differ from state to state as both federal law (Title III of the Consumer Credit Protection Act (CCPA)) and state laws regulate garnishments. However, the law that is most favorable to the debtor will be the law that prevails. We will explore the ins and outs of wage garnishment and the aspects surrounding the various California Laws.
The Wage Garnishment Process
Wage garnishments occur when you fail to pay a debt and the creditor gets a judgment against you. First the creditor must sue you in the court and should prove that the debt is due. During the court process you will have an opportunity to defend yourself and question the validity of the debt. Should you choose not to defend yourself the court will render a default judgment, and the creditor can then proceed with the wage garnishment. Or should the court find in favor of the creditor and deem the debt valid a judgment will be issued and a wage garnishment may commence.
Once the creditor has a wage garnishment order they will advise your employer of the judgment and your employer will be legally obligated to garnish your future wages. Your employer is also required to advise you of the wage garnishment and provide you with a copy of the Court’s order. At this time you may challenge the order in Court. Once the wage garnishment begins your employer will be responsible for deducting the correct amount and forwarding the payment to your creditor until the full debt or judgment has been paid.
In California the percentage of disposable income that may be withheld varies by the type of debt owed. Further, California Law mandates that only one wage garnishment can be in effect at a time and that certain debts are to be given priority over others.
- Support Payments
- Student Loans
- Back Taxes
- Credit Card or Personal Loans
California Law dictates that child or spousal support be given priority over others and indicates that the court may garnish or withhold up to 60% of your disposable income. It also mandates that a 5% penalty can be added onto the garnishment if you have missed more than 12 weeks of support payments. However, if you are supporting another child the maximum amount that can be withheld is 50% of your disposable income.
Should a judgment be granted against you for student loans whether through private banking institutions or from a federal fund, 25% of your disposable income may be withheld. However, if you have several loans and have consolidated them only 15% may be withheld through the garnishment.
California Law provides that unpaid taxes owed to the State of California be garnished at a rate of up to 25% of your disposable income. The Internal Revenue Service or IRS does not set a percentage they withhold instead they use a formula dependent on your deductions.
All other unpaid debts may be withheld at a percentage of up to 25% of your disposable income.
Stopping or Avoiding Wage Garnishments
There are many ways to stop a wage garnishment such as claiming the garnishment creates an undue hardship. Should you wish to explore your options, Goldbach Law Group Offices in Long Beach and Offices in Whittier has the best bankruptcy attorneys which is knowledgeable of the multitude of debt collection laws and can review your case with you and assist in finding a solution to your problem.