How Can I Stop a Garnishment?
A garnishment happens at the request of a Creditor who has obtained a judgment against you. A private creditor cannot garnish you without a final Court judgment in hand (although they often threaten to do so without one). On the other hand, a governmental entity, such as a tax authority, student loan entity, or a State agency which administers support payments, do not need to obtain a judgment before proceeding with a garnishment. These garnishments are issued as an administrative order. In either case, the garnishment can be issued against your wages - a payroll garnishment, or it can be issued against your bank account - a bank garnishment.
A payroll garnishment requires your employer to deduct up to 25% of your net paycheck if you make more than $1,257.00 per month after normal deductions. A bank garnishment will freeze the entire balance in your bank account, up to the total amount of the debt. Governmental entities for child support can take up to 50% of your wages and student loan agencies can take up to 15% of your wages.
There are only a few ways to deal with a Garnishment. 1. Allow it to continue to its end , 2. Pay the amount due in full and stop it, 3. Work out a deal with the creditor to pay it in full in monthly payments, or pay a lump sum to settle the account, or 4. File a bankruptcy petition.
1. Let it continue. Obviously not your first or best choice. The garnishment essentially takes your last paycheck dollar needed for food or utilities, and it continues for up to 6 months at a time, and can be started again and again until the debt is paid in full. Your credit score takes a hit and remains low until years after the garnishment stops.
2. Pay the amount due in full. If you can borrow the funds or have the funds available to you, you can pay the amount due to the Court clerk, and they will immediately release and stop the garnishment
3. Work out a payment plan with the creditor. While some creditors will work with you, once they have their judgment in hand, and have a garnishment issued and pending, they are unlikely to work out a payment plan until the current garnishment has ended. At that time, they may listen to your settlement offer, or payment plan. I have found that I can sometimes work out a lump sum settlement offer at less than 30% by using the threat of the filing of a bankruptcy petition as leverage. Because the creditors know that I am a bankruptcy attorney, they will often work with me. The threat of a bankruptcy filing from you as an individual is not as convincing as they hear it all the time, usually with no follow through by the person being garnished.
4. File a bankruptcy petition. It is your last option, but probably your best option, especially if you have other debts that need attention. It is also the most cost effective way to handle the problem as the cost to settle or pay monthly payments will certainly be more than the cost of the filing of a bankruptcy petition. Your credit score will not go much lower with a bankruptcy filing, because it has already been damaged by the order of judgment against you, as well as the pending garnishment order. Finally, with a Chapter 7 bankruptcy filing, your credit will rebound a year later, generally improving by 100 points or more. Contact my office to discuss any of these options.