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