What Is A Wage Garnishment?
A Wage Garnishment, also referred to as an Earning Withholding Order, is a legal technique that requires the employer of the judgment debtor (i.e. person who owes the money) to withhold a portion of the judgment debtor’s income to satisfy a money judgment. Wage Garnishments in California are governed by California Code of Civil Procedure §§ 706.010 – 706.154.
What Leads To A Wage Garnishment?
A Wage Garnishment occurs when the judgment debtor owes a debt to a creditor and the creditor has been unable to collect on that debt. After collection attempts have usually been exhausted, the creditor will bring a lawsuit against the judgment debtor. If successful in that lawsuit, the Court will issue a Judgment in favor of the Creditor. If the Creditor is unable to collect on that Judgment, the Creditor can now request the Court enter a Writ of Execution. A Writ of Execution is a Court Order giving the Sheriff’s office the power to seize the judgment debtor’s property in order to pay the debt. The Creditor will now take this Writ of Execution and apply for an Earnings Withholding Order (i.e. Wage Garnishment). The Earnings Withholding Order must be served on the judgment debtor’s employer and the employer is legally required to start withholding a portion of the wages and must turn it over to the Creditor.
How Much Can Be Garnished?
Unless the Wage Garnishment is stopped by agreement or by operation of law, it will continue until the entire judgment is paid in full. This can prove to be a very difficult process to deal with. On a per-check basis, the Federal Government limits the amount that the Creditor can garnish to either 25% of the judgment debtor’s disposable income or the amount by which the judgment debtor’s weekly disposable earnings exceed 40 times the hourly minimum wage, whichever is less.
EXAMPLE – Stacy earns $1,500.00 per week. After her required deductions are taken out, she is left with $1,000.00 of net income. Let’s assume the local minimum wage is $10.00 per hour. Using the above formula, Stacy’s wages can be garnished up to $250.00 per week (25% x $1,000.00) or $600.00 per week ($1,000.00 - $400.00), whichever is less. Thus, Stacy would likely be garnished $250.00 per week until the judgment is paid in full or the garnishment is stopped by agreement or operation of law.
How Can The Wage Garnishment Be Stopped?
- BY AGREEMENT
- The Judgment Debtor can contact the Creditor and attempt to set up an alternate payment arrangement besides having his/her wages garnished. If the Creditor agrees to accept the alternate method of payment, they will put a hold on the garnishment. However, realistically speaking, this method is rarely successful. Most creditors are not willing to stop the wage garnishment to discuss alternate payment options. The reason being is because they have already done a lot of work to get to this point and now they can just sit back and receive payments through the Wage Garnishment.
- BY FILING AN EXEMPTION
- In California, you can file an exemption to reduce, or possibly stop, the Wage Garnishment. You would need to prove to the Court that the money that is being garnished is needed to support yourself and your family. If the Court finds this argument to be credible, the amount being garnished per paycheck will be reduced or it will be eliminated all together.
- CONTEST THE JUDGMENT
- If the judgment debtor has legitimate basis to contest the Court ordered judgment, he/she could get the judgment vacated (i.e. overturned). One reason the judgment could be vacated is for improper notice. The creditor is required to serve the lawsuit on the judgment debtor. If it can be proven that the judgment debtor was never served or improperly served, the Court could overturn the Judgment and in turn, the Wage Garnishment would be stopped. However, this is generally just a temporary fix because the Creditor could re-file the lawsuit and properly serve the judgment debtor. Thus, the judgment debtor needs to analyze whether it is worth spending the time and money fighting the judgment to just end up in the same spot again.
- FILE FOR BANKRUPTCY
- You can stop a Wage Garnishment from proceeding forward by filing for relief under either a Chapter 7 or Chapter 13 Bankruptcy. The alternate methods of stopping the Wage Garnishment (see above) can prove to be costly, timely, temporary, and in most circumstances, unsuccessful. Filing for Bankruptcy will put an immediate and final stop to the Wage Garnishment and if you contact our office early enough, we can stop the Garnishment from ever taking effect.
Filing a Chapter 7 or Chapter 13 Bankruptcy will initiate an Automatic Stay pursuant to 11 U.S.C. § 362. The Automatic Stay acts as a ban or injunction on creditors from pursuing collection attempts, such as a Wage Garnishment. As soon as the Bankruptcy is filed, our office will personally send notice to the Creditor that is garnishing your wages, the Sheriff’s office handling the garnishment, and your employer’s payroll department. By doing this, all of the necessary parties involved in the garnishment will be on notice that they are no longer allowed to garnish your wages. The Sheriff’s office will then initiate a release of the garnishment and serve that upon your employer instructing them to stop garnishing your wages.
In a Chapter 7, the goal is to receive a Discharge pursuant to 11 U.S.C. § 727. A Discharge is a Federal Court Order that eliminates a Debtor’s obligation to pay back his/her dischargeable debt. Some examples of dischargeable debts are credit cards, medical bills, personal loans, and deficiencies from car repossessions, to name a few. To see a complete list of debts that are non-dischargeable, please refer to 11 U.S.C. 523. In order to receive a Discharge, the assigned Chapter 7 Trustee will liquidate the Debtor’s assets that are left un-exempt. However, in most cases, our office will be able to exempt all of the Debtor’s assets and keep them safe from being liquidated.
In a Chapter 13 Bankruptcy, the goal is also to receive a Discharge but the method of receiving that Discharge is completely different. The Chapter 13 discharge is governed by 11 U.S.C. § 1328. Here, the Debtor is entering into a reorganization of his/her debts and a repayment plan for 3 to 5 years. As long as the debt that is at question is a dischargeable debt, it will receive the same treatment as the other general unsecured debt (i.e. credit cards, medical bills, etc.). In most cases, the general unsecured debts get nothing or very little of their claim through the Chapter 13, while the remainder is discharged.
How Can Bains Legal Help?
Local Sacramento Bankruptcy Attorney Pauldeep Bains has been helping clients facing wage garnishments for over 6 years. His aggressive demeanor when dealing with creditors, coupled with his thorough understanding of the Wage Garnishment process and the Bankruptcy Code, are exactly what you need when facing a Wage Garnishment in California. Mr. Bains will be able to efficiently review your particular situation and explain to you in detail all of the options that you have. If Bankruptcy is the best option for you, Mr. Bains will advise you of that and personally develop a game plan with you to stop the Wage Garnishment in the quickest possible fashion. In emergency situations, Mr. Bains will even be able to get your Chapter 7 or Chapter 13 case filed on the same day that you contact Bains Legal. Do not waste another day without speaking to Bains Legal. Call 916-800-7690 now!
We help clients in the following areas: Sacramento, Elk Grove, South Sacramento, West Sacramento, Natomas, Citrus Heights, Antelope, Fair Oaks, Gold River, Rancho Cordova, Roseville, Rocklin, Lincoln, Wheatland, Yuba City, Marysville, Woodland, Davis, and Lodi.