Every day in the office, I get calls from frantic people who wonder why their pay checks are being garnished. A wage garnishment is an order from the court (called a 'writ') that orders the employer to withhold a portion of the employee's paycheck. The employer is then ordered to send that withholding to the creditor. In Washington state and many other states, creditors are allowed to garnish up to 25% of the debtor's net pay (after taxes). To someone who makes $45,000/year (gross pay), it could mean $800/month is garnished.
How does this happen?
The collection process is pretty standard. When you stop making payments toward your debt:
- You'll get calls and letters from the bank telling you that you're delinquent.
- After 2-3 months without success, the debt is sold to a collection agency (aka "third-party creditor").
- Depending on how aggressive the collection agency is, the debt can either be sold to another collection agency or simply assigned to a local attorney to enforce the contract.
- If the attorney takes the case, he/she will file a lawsuit against the debtor.
- In most cases, the debtor has no legal grounds to fight the lawsuit. If so, the court will grant a judgment against the debtor.
- The creditor then takes the judgment and ask the court for a 'writ of garnishment'. The writ is served to the employer and garnishment begins.
- The creditor may also ask the court for a 'writ to levy' (or 'writ of attachment'), these terms varies depending on the state. This writ essentially allows the creditor to seize assets to satisfy the debt. To a certain extent, creditors can levy automobiles, jewelry, cash, gold, etc. In Washington, creditors can clean out a debtor's bank account, as long as the creditor leaves the debtor with at least $200.
- One law firm in Bellevue, WA experienced a backlash from a debtor it had to garnish: http://www.q13fox.com/news/kcpq-061510-axevandal,0,4567701.story
This is a tough question to answer. A writ of garnishment/levy/attachment are all considered valid court orders. They are issued by a state court, and therefore, can only be defeated by a federal court order. A Bankruptcy filing automatically triggers a federal court order to stop collecting debt. 11 USC § 362(a). People cringe when I tell them that their only option is a bankruptcy, but this is the only means to force a stop to garnishment (without fighting the creditor). I do understand that it has to do with self-pride and despair. Because of that, I approach each case with delicately and with compassion. I do understand that nobody wants to file bankruptcy, even if it means a brighter future. I'm not excited when I tell people that bankruptcy is their only option. But I do remind them that I understand their situation and that it's a personal choice; I'm there to help.
Arrow Law Group, PLLC | 1904 3rd Ave, Suite 930, Seattle, WA 98101 | www.ArrowLawGroup.com
Thank you for this informative post. I've never heard of wage garnishment, but I actually know of someone who may have experienced this before. I'll keep this in mind for the future!
ReplyDeleteSo prety much when this happens you are kind of..... Well to put it simply screwed.
ReplyDelete:/
that sucks.
This is very new to me as i have not heard of a wage garnishment on credit card debts before. The only wage garnishment that i've come acrossed so far is when you don't pay for child support. One of my job duties is reconciling the payroll bank account and i've seen employees' paychecks are being garnished for child support payments.
ReplyDeleteThank you Minh for this very informative post!
Wow! I never thought that I would ever enjoy reading about laws and such, especially after having an ex-lawyer as an English teacher for two whole middle school years, but you make all these questions and confusions so much less stressful and understandable! 8)
ReplyDeleteNow I understand how all this debt-collecting business kind of works! I've got to go tell some people about this...they really need to get going on their payments...and getting things together...
Thank you very LARGE!
<33 Rena
I've never heard of such thing before. Thanks for informing me about this.
ReplyDeleteThank you for this informative post! I've always been interested in law, and it's interesting to read explanations from someone who's doing it for a living.
ReplyDeleteYou said that in most cases, the debtor has not legal grounds to fight the lawsuit. Could you, perhaps, write a post about the rare cases when there are legal grounds to fight it?
Maria
This is informative! Wow, I've never met anyone who's had this done to them, but I imagine this is why employers do credit checks upon hiring. In California, it is by law to check if someone owes money for child support, etc. I'm not 100% sure, but I hear it was a bill passed not too long ago! As always, informative :)
ReplyDeleteI hope you don't mind this question ^_^
ReplyDeleteI was wondering about what happens if you take someone to a small claims court. It looks like I may be forced to get a writ of garnishment b/c the person is not paying back money that's due, however, it's not very much now since she has paid back most of it. The amount she refuses to pay back is the $74 court fees since she claims it's not "her fault" that I filed the case.
What I want to know is: Does the fact someone has been sued stay on their record? If so, if you should settle out of court does it still show on their record or only after a trial date?
btw your blog has been a lot of fun to read :D -- extremely helpful too!
You seem like a really good lawyer....if i ever have issues, im moving to seattle :) lol this is kind of scary, especially with the economy the way it is. its like extra enforcement to just pay debts. i say this all the time, but i love how you make things so informative and interesting, definately fun to read. im always waiting for a new post on this blog :)))
ReplyDeleteMinh, I would like to present you with the "One Lovely Blog" award. It is at the bottom of my most recent post-- the image of the teacup with roses.
ReplyDeleteThank you for providing bankruptcy info for all of us. It is sounding pretty fancy, maybe I should file. ;)
I have only heard of wage garnishment when it comes to delinquent parents not paying their child support. You know whats interesting is, what do ppl think is going to happen when you do not pay your bills? You are basically making an agreement with a company when you use your credit cards, that you will pay them. I totally understand that life happens, because I have been there, but you still have to pay your bills. If it was your company and someone was not paying you, what would you do?
ReplyDeleteAt the same time I think maybe ppl just do not know the steps to take when they get in that type of situation.
You seem to be a very empathetic lawyer & I think that is definitely what ppl need in that type of situation.
This actually happened to me! It was for a bill that I wasn't supposed to pay. They kept sending me letters, and I called the company and the company said that my bill was waived and to ignore the letters. A few months passed, and I got a letter from a collection agency!!!!! I was so sad and frustrated =( I called the company and they said they would take care of it, and they didn't!!! I got another letter from the collection agency.. Long story short.. the company finally fixed their issue and the collection agency finally sent me a letter stating it was taken care of.. I always wondered if the statement sent to the collection agency would ruin my credit =(
ReplyDeleteI always ALWAYS pay my bills and I'm never late. I know when to stop using my credit card and watch my limit all the time. It can be so annoying when people are chasing after you for money. I don't know anyone who's been through that yet. I DO know someone who had gotten their credit card number stolen and the person used it, but the company called right away to report the suspicious activity. Thank goodness they were minor payments and the company found out quickly!
ReplyDeleteThank you for the post, once again!
xx The Little Dust Princess
WOW
ReplyDeleteI never really knew about these form of writs-- very interesting.
I feel that if more people were educated about these kind of issues, they would be less eager to use a credit card for everything and anything (overindulging, especially)
What motivated you to specialize in this kind of law? I am currently pondering some kind of law that has to do with business, however I one day would LOVE to be a judge and am unsure if business-oriented law would be the way to go. However, I also don't know if I want to be a litigator and by the sounbs of things, you must to become a judge. I just don't know! haha
Also, how does a lawyer decide if they are going to take a case that presses charges on someone with this credit card debt? Is there a special kind of law for that?
Thanks for this post-- keep em' coming please, I love to learn new things and I am sure all of your other readers do to :)
Pearls&Politics
Oh wow, ive never heard of such a thing =o it would certainly suck to have this done =(
ReplyDeleteI've never found this topic on credit cards to be too interesting because I personally don't have one, but upon reading the first few sentences of this post, the first thing I thought of was the movie: "Confessions of a Shopaholic". It was hilarious how the banker (or some kind of guy trying to get money back from her) chases her around the city!!
ReplyDeleteIt's sad when someone even gets to the point of wage garnishment. You're pretty much screwed once you get there. It's a big hole to climb out of and, in my opinion, declaring bankruptcy is just an easy way out for many isn't it? (Please refer to Minh's previous post). It's the 'American way' to live out of their means, thus relying more so than often on their credit cards. How hard is it to not put yourself in debt?
ReplyDeleteThat actually happened to me once...by accident. I got my paycheck and saw a big...'WAGE GARNISHMENT AMOUNT' and nearly dropped my eyeballs. That's when I found out about wage garnishment. Luckily, HR saw their mistake and processed the correct person they were after. Whew!
Do you like taking cases like this?
Wow thanks for this post, very informative information! I guess this is one of the reasons why I don't really own any credits cards. I mean I'm very responsible, so I know if I ever do one day have one I will be paying my bills...haha.
ReplyDeleteI guess I am "lucky" lol I make no way near that just yet. And I owe money, I do plan on using my income tax to pay that off though. I don't want that to drag me down later on when I want to make life changes etc. Thanks for the info.
ReplyDeleteYou know, I learn more and more about law and the process of money. I never really thought about what happens if I were to skip out on my payments, that's why I make them with plenty of time to spare. I have a cash policy. I withdraw a certain limit I can afford to spend, and once the cash is gone, that's it! Have to wait till next pay day and see what I can afford. Proud to say we've been debt free because of this method for five years now!! :)
ReplyDeleteThanks for the heads up tho, a nice little reminder of what happens is enough to keep me on the ball this Holiday season.
I have to watch over my bills and make sure I don't get over the debt :< Thanks for this post! It probably will help me in the future when I am handling a lot of bills!
ReplyDeleteOuuu yeah I heard of this before but never knew the process of how those people could take away part of your money. Also doesn't this include part of taking away your income tax money? I have a friend and she told me her inlaws doesnt receive thier income tax money because they didnt pay thier bills so when they thought they were going to receive the money they never got it because it was being garnish! With this thoughtful and well done situation now I know the reason why. ha ha! I thought it was illegal to just take people's check and take part of thier money but I was wrong. :) Nice post!
ReplyDeleteThis was very informative. Thanks.
ReplyDeleteI always pay my bills first and foremost and I am thankful and very grateful to have a job that allows me stay on top of my bills and live a healthy lifestyle.
Woah! I didn't know about this law, I hope it's not enforced in Canada as I never heard about it. Good thing that I've kept up a good habit of paying my bills ^^
ReplyDeleteAnd that's great how you handle each case with delicatecy and compassion! I don't often see people who are passionate about their job.
How the credit score is rated is a huge mystery to me, but I imagine that if they do get a judgment against you, it will be BAD for your score!
ReplyDeleteThe first thing to remember is not to spend more than you can afford. Some people think that just because they have that "credit", it entitles them to spend the extra money they don't have.
Thanks for the information. I'm in college still so I have a lot of friends who sometimes forget to pay their bills. Now I know what to tell them!
ReplyDeleteI don't need to pay bills yet Lol.. but if I remember, I'll come back to this blog for some info.
ReplyDeleteBtw did you design/build your site?
http://www.arrowlawgroup.com/
http://londons-boutique.blogspot.com/
I have the personal belief that people should never live above their means, as this always leads to financial ruins one way or another. So for the most part I tend to side with debt collectors, but sometimes life catches people by surprise and I'm compasionate enough to even give people some slack. That Writ to Levy is just jaw dropping, $200 won't be enough to take care of anyone, especially a family. Side note, if wages are being garnished, wouldn't that be some sort of privacy issue/violation? Since your employers will now know about your financial situation.
ReplyDeleteI feel bad for the people out there whose only option is to file bankruptcy. However this world is scary, even though I m only 17 I know alot. In reality when facing something like this it s either money or pride.
ReplyDeletesounds extremely terrible to hear the last option and best is bankruptcy. *sigh* When there tends to be a pile of bills, there are times where its hard to pay them all on time. sadly, fees are being charged causing for more money to be paid. Debts are very scary! I know of someone where they constantly receive calls from a debt company. yikes! people must remember to pay on time! thanks for the useful info!
ReplyDelete-SharBEAR
I had no idea they could do that I only knew that collection people would call and harass you. It must really suck to be in a situation like that.
ReplyDeletei've never heard of wage garnishment but it's good to know! i actually finally paid off all of my credit card debt last year... my fiance has pushed me to be financially responsible and now i pay off my credit card debt every month! :) i need to send him to your blog! i know he'll enjoy it a lot!
ReplyDeletewhat about people who work at asian jobs; ones that don't get paid by paycheck rather by cash?
ReplyDeleteThanks for the info, you never know when this can be helpful
ReplyDeleteThanks for the information it was so helpful since I know a couple people who are in debt. Thanks again for the info :)
ReplyDeleteThis is very informative Minh! Thanks for sharing.
ReplyDeleteI'll try my best not to get into dept. So shame to file bankruptcy :(
wow i've never heard of a wage garnishment before this. I don't even have a credit card right now but I know I will have to be careful in the future. (I have a bit of a shopping problem lol) I definitely don't want to have to depend on my parents to get me out of debt. I've read some articles about how debts can snowball if you don't pay them due to all the fees :/
ReplyDeleteGreat post but the truth is... you shouldn't have to write something like this! I don't know why people think it's ok to NOT pay their bills... this drives me nuts!
ReplyDeleteI used to obtain judgments and start the garnishment process at my law firm. I would get some angry people wondering why a part of their pay check was taken and then all of a sudden, they do feel like they want to pay the debt that they originally owed! Garnishment is very effective in getting someone's attention!!!
ReplyDeleteWow that's crazy, I pray I never go through something like that.
ReplyDeleteNice post. Thanks for the work.
ReplyDelete