Here's the scenario: you go to the emergency room one day. You don't have insurance, and the bills from the ER visit and all the lab work that was done just keep adding up. You pay off most of the smaller bills, but the big one for $3,000 stays in limbo for a couple of years. You intend to pay it back, but you're never quite financially comfortable enough to tackle that extra debt. You don't hear from the hospital anymore, debt collectors stopped calling you a while back, so you assume it just "fell off" your credit, right?
Wrong. One day you get a letter with the words "Civil Action Lawsuit" saying you're being sued, and because you're not familiar with the legal jargon or the legal steps necessary to protect yourself, you do nothing. And then it just so happens one day you open your paycheck to see that 25% of it is gone...just like that. Suddenly, it's a bit more difficult to stop and smell the roses as you begin to panic about how you're going to pay your electricity bill and groceries this month. Now your wages are being garnished and there is nothing you can do about it.
Well, almost nothing. If this story isn't familiar to you, I can guarantee it's familiar to someone you work with.
In a bankruptcy, you can stop the garnishment from happening.
Here's how it works:
A chapter 7 discharges your debt. If you're being garnished for something that can be discharged, well, that pretty much puts an end to that.
A chapter 13 allows you to repay a portion of your debt back over a period of 5 years. Because you're now making payments to the Chapter 13 Trustee, your creditors cannot be in contact with you anymore, can no longer keep the garnishment going, nor can they take any other action against you.
Of course, you won't confidently know if you even need to file bankruptcy until you speak to an attorney. If you're being garnished for something that can be paid off in a short period of time, it's best to grin and bear it for the time being and try to prevent this from happening in the future. If you're worried you might be garnished soon but not sure if your income is exempt, you really need to research what type of wages can be garnished and what type can't be. Luckily, I've already written an outline to make it easy for you. Click below to understand your rights.
A few reasons wage garnishments are on the rise:
1.) More and more people are back at work now. As a result, old debts are coming back from the dead and creditors are garnishing wages left and right.
2.) You might think the creditors don't know about your latest job. You know, the one that finally pays you enough to pay your bills. But sad is the day you discover the hard way that not only did they find out where you work, they legally took 25% of that paycheck to pay off a debt you had hoped was dead and buried.
Your private information isn't so private these days. Used to, the creditors could sue you and garnish your wages for unpaid debts...if they knew where you worked. These days, there's almost no private information anymore. Nearly all of a debtor's information can be easily obtained over the internet for free or with a small fee. If you think you're off the grid, think again.
My final point is that, although you can stop your wages from being garnished, you do still owe the money. The trick is finding the best way to handle the debt. If you catch a judgment before the garnishment starts, it's a simple thing to do to call your creditors, verify the debt and what repayment options they are willing to offer you. If you are currently being garnished for something that you simply cannot afford right now, give us a call and we'll walk you through your next steps.
You don't have much to lose...well minus a portion of your paycheck.
