Can Unsecured Creditors Garnish Wages To Recover A Debt?
Author: K D Garrow
Wage garnishment is a term used in the US for a legal order whereby money is taken directly from the wages of a person to pay a debt owed to another person or company. It is not something that can be done without a court order, so unsecured creditors are not able to garnish wages directly without going through a legal process first.
For a creditor to garnish wages they have to first secure a judgement from the court by suing you. Before your wages can be garnished you must have lost a law suit over the money that you owe. There will then be a court judgement against you which in turn allows them to garnish your wages.
Each state has different laws on allowing unsecured creditors to garnish wages and there are always limits on how much may be garnished. The state laws vary quite a lot, but on average the limit on how much of your wage can be taken is around 25% of the net income. It is permitted in all states to garnish wages for child support, student loans, alimony payments or tax arrears, and for some of these the allowed limit can be as high as 50% of wages. If you already have other garnishment orders in place, any new order will have to wait until the existing order is complete.
If an unsecured creditor does garnish your wages you can try to challenge the judgement, but you will have more chance of changing things if you start to negotiate earlier in the process. Ideally you should take steps to avoid getting anywhere near being sued or having a company garnish your wages. This process sometimes happens simply because there has been no communication about the debt.
Debts are never resolved by ignoring them and there are several well tried systems you can use for dealing with serious debt problems. If you show your creditors that you are as upset as they are about not being able to pay, and that you are serious about taking steps to change the situation, you are far less likely to be sued or have them garnish your wages.
The simplest way to tackle debts to more than one unsecured creditor is to use a debt management plan. These are offered by debt management companies and are widely used in the US and the UK. They are a way to consolidate all your debts into a payment plan that reduces the amount you pay out on your debts. The creditors are persuaded to alter the details of how your debt will be paid back, which results in lower charges for you and only one payment to think about.
To be eligible for debt management you have to have a job that gives you a regular income and your debts must be to two or more unsecured creditors. You will need to find a debt management company that you can depend on, and you can improve your chances of getting the best deal by applying to a few and comparing what you get back. You can ensure you do not make the mistake of applying to any dishonest companies if you start by using recommendations for organisations that have been verified as among the most reputable and well proven in terms of ethics and record of success.