When you’re struggling with paying your debts, your creditor can file a lawsuit against you to garnish your wages to pay off your debt. When this happens, your financial situation can worsen since you lose a portion of your paycheck. Wage garnishments can make it difficult to pay other bills, debt, and even groceries and other necessary expenses. However, an experienced wage garnishment lawyer can help.
If you’re behind on paying your debt and your creditor is threatening a wage garnishment order, don’t wait until it’s too late. The Kentucky bankruptcy attorneys at the O’Bryan Law Offices can help. You can avoid having your wages garnished by exploring debt relief options, like filing for bankruptcy. While bankruptcy can feel like the end of the road, it’s only the beginning of financial freedom and debt relief. To learn more about filing bankruptcy to avoid wage garnishment, contact the O’Bryan Law Offices today by calling 502-339-0222.
What Is Wage Garnishment?
Wage garnishment is a debt collection tool that creditors use to collect unpaid debts. If you have debt with a creditor, they can file a lawsuit against you to try and collect the debt. If they win the judgment, debt collectors can take money out of your paycheck to pay back the debts owed. Once the decision is granted, your employer must withhold a percentage of your wages. Then, they must send it to the creditor until the debt owed has been paid off.
When Does Wage Garnishment Happen?
A wage garnishment can happen when you get behind on debts, and the creditor believes the only way to collect that debt is to file a lawsuit against you. This is usually a last resort for debt collectors who are trying to collect unpaid debts. Your debt collector will warn you multiple times and make other collection efforts before resorting to garnishing your wages. There are instances where the creditor can force a wage garnishment for unpaid debt without pursuing a court order, but you’ll still receive warnings beforehand.
The only debts that don’t require a court order are federal student loans, back taxes, and child support. Most debts like credit card debts and loans will need a court order to begin garnishing wages.
How Does Wage Garnishment Work?
A wage garnishment is only pursued as a final effort for debt collection. Creditors will reach out for debt payments many times before they file to have your wages garnished. Listed below are the steps of a typical wage garnishment process.
- Delinquent Account: For your debt collector to file a wage garnishment order, your account must be incredibly delinquent. You don’t have to worry about wage garnishment if you’ve only missed one payment.
- Intense Collection Efforts: Your lender will typically sell your delinquent account to a debt collection agency once you’ve gotten behind on multiple payments. Generally, they sell your debt for less than face value, so they no longer have to focus on trying to collect the debt. The downside of having your debt with a collection agency is that they’ll do anything to collect the money owed and aren’t very willing to work with you.
- Lawsuit: When the debt collector cannot collect your debt, they’ll file a lawsuit against you. If you’re being threatened with a lawsuit, the collection agency is seriously considering it, so don’t take these threats lightly. You should consult a Kentucky wage garnishment attorney once you know about the impending lawsuit. Just because they’ve notified you about filing a lawsuit doesn’t mean that the wage garnishment will necessarily happen. Your attorney will be able to provide options to stop wage garnishment.
- Court Judgment Issued: If you do not consult with legal counsel and fail to attend your court hearing, the judge will most likely issue the wage garnishment order based on the information provided by the debt collector. It’s crucial to appear in court to state any financial hardships or other issues you have to avoid the garnishment.
- Wage Garnishment Begins: Your employer will withhold money from your paycheck for a certain period of time or until a certain percentage of your debt is paid. The only way to pause a wage garnishment is if you can prove financial hardship.
- Debt is Resolved: Your wage garnishment will continue until you can repay the balance owed or a date specified by the courts.
How Much of Your Wages Can Be Garnished in Kentucky?
Federal laws have limited the amount of money that can be taken from wage garnishments. Every state is free to create its own wage garnishment limits. Kentucky follows the same guidelines set forth by federal law.
According to Kentucky law, debt collectors can’t take more than 25% of your disposable income or the amount exceeding 30 times the federal minimum wage, whichever amount is less. This applies to wage garnishments for most consumer debt. The federal minimum wage is $7.25, and 30 times that amount is $217.50.
How to Stop a Wage Garnishment Instantly
Once you’ve received the notice from your creditors that they’re seeking garnished wages, it’s essential not to ignore this letter. Some options can help postpone or stop wage garnishment.
Contact the O’Bryan Law Offices immediately following receipt of this notice. Our attorneys will discuss the legal options available to help you avoid this. Below we’ve listed some ways to avoid or prevent a garnishment.
Pay Off Your Debt
Paying off your debt can be challenging to do if your financial situation has reached the point of impending wage garnishment. There are a few other ways that you can pay off the debt to stop the garnishment order. You can try to consolidate your debt into a new loan. Debt consolidation in Kentucky does not get rid of your debt but essentially resets the debt. It’s only a viable option for stopping wage garnishment if you know you can make payments on the new, consolidated loan.
The O’Bryan Law Offices is not a debt consolidation business. At our law firm, we recommend filing bankruptcy over a debt consolidation since it provides legal protection. A debt consolidation will not make your creditors go away like a bankruptcy will. When you file bankruptcy, the automatic stay will take effect. Debt collectors can no longer harass you, avoid foreclosure and repossession, and more.
Work Out an Agreement With Your Creditor
When your debt has reached wage garnishment territory, your creditor has likely already turned it over to a collection agency. This can help when working out an agreement since they buy your debt for a low amount. When you’ve been notified about a garnishment lawsuit, contact the debt collector to see if you can work out a payment plan to avoid garnishment. Since the collection agency buys your debt for cheap, they’ll likely agree to work with you on devising a more manageable payment plan to avoid the lawsuit. Discussing this with the agency before the court is critical because they rarely negotiate once the order has been granted.
File a Claim of Exemption
Another option for stopping or reducing wage garnishment orders is filing a claim of exemption. When you file an exemption, you’re stating that some or all of your income should be exempt from being garnished. For example, an exemption can be an option if your wages are already being garnished. An exemption can also help if the wages are being garnished for incomes that are exempt from being garnished, like Social Security, disability, and retirement. When you file your claim, you should provide documentation to show that the wage garnishment will affect your ability to provide for any dependents and that you will not be able to pay for necessary expenses.
Challenge the Wage Garnishment
When you receive the notice your debt collector is pursuing a wage garnishment, there will be information on how you can challenge the order. To challenge the garnishment order, you’ll need to file the necessary paperwork with the clerk of the court that granted the order.
If you choose to challenge the garnishment order, you must act quickly. You have a limited number of days to file your challenge. If you miss that window, your employer will be forced to garnish your wages.
Once you receive the garnishment order, contact one of our attorneys at O’Bryan Law Offices to help pursue your challenge. We’ll make sure you have the proper documentation so that you can act quickly. A challenge may seem like a lot of work, but it can postpone the garnishment order or even stop the wage garnishment from happening.
It’s important to seek a garnishment challenge if exempt income, like Social Security, is included. If another creditor is already garnishing your income, it’s imperative that you pursue this new garnishment order.
Negotiate a Debt Settlement
To pursue a debt settlement for stopping wage garnishment, you’ll need to contact your creditor before the court makes its judgment. A debt settlement is an agreement made with your creditor that you will make a lump sum payment to satisfy the debt. The payment is usually less than the original debt. Creditors often agree to this to avoid a lawsuit. Your creditor’s chances of agreeing to a debt settlement are more likely if you contact them before the court has issued the garnishment. This is only a viable option if you discuss a settlement with your creditor before the court makes a decision.
It’s important to note that the O’Bryan Law Offices are not a debt settlement agency and do not provide these services.
Seek Help From a Nonprofit
If you’re struggling to make payments, you might want to consider signing up for free debt counseling at a local nonprofit. During these sessions, a credit counselor will evaluate your current financial situation and offer recommendations on dealing with collection agencies. Your credit counselor may be able to help you devise a repayment plan.
The O’Bryan Law Offices is not a credit counseling agency, but we can offer support during your completion of the credit counseling program.
File for Bankruptcy
If your financial situation is dire enough, consider a bankruptcy filing to stop the garnishment process. Once you file, the automatic stay will take effect, and creditors will no longer be able to attempt to collect your debts. This includes wage garnishment orders.
Filing bankruptcy can be scary since there are so many negative connotations associated with it. However, bankruptcy can help you avoid garnished wages and help you finally find debt relief.
Contact the Louisville bankruptcy attorneys at the O’Bryan Law Offices today if you’re considering bankruptcy to stop garnished wages. It’s important to note that a bankruptcy filing will stop most garnishments except the collection of child support or alimony.
The type of bankruptcy filing you qualify for will determine what happens to your unpaid debts. We’ll explain what happens to a wage garnishment when you file a Chapter 7 and Chapter 13 bankruptcy.
Your garnishments will be permanently terminated if you qualify for Chapter 7 bankruptcy in Kentucky. A Chapter 7 will liquidate your non-exempt assets to pay off the debts you owe. It’s a faster process than Chapter 13, but you risk losing your home and vehicle.
A Chapter 13 bankruptcy in Kentucky is an option if your income is too high to meet the qualifications for a Chapter 7. With Chapter 13, your court-appointed trustee will create a repayment plan so that you can repay your debts owed over a 3 to 5-year period. It lasts longer than Chapter 7, but you will most likely be able to keep your house and car. Under some circumstances, the court may require your employer to deduct your debt payment from your paycheck.
What Is the Best Way to Stop Wage Garnishment Immediately?
The best way to stop a wage garnishment is to file a bankruptcy petition immediately upon receiving the notice. The automatic stay will take effect upon filing for bankruptcy, preventing collection agencies and creditors from trying to collect their payments.
If there’s a chance that a collection agency is going to file for wage garnishment, you’re most likely behind on other bills and payments, which bankruptcy can offer relief for as well. A bankruptcy filing can help you catch up on medical bills, credit card debts, and other bills you may have fallen behind on.
Should I Hire a Wage Garnishment Lawyer?
While many options are available to avoid wage garnishment, some can offer “get rid of debt quickly” programs that are actually scams resulting in a worse financial situation than what you started with. If you’ve received notice of an impending garnishment lawsuit, contact the attorneys at O’Bryan Law Offices. We always recommend filing for bankruptcy because it’s the most dependable and effective route to get out of debt. Our bankruptcy attorneys will evaluate your finances to determine which bankruptcy filing would be right for you.
Contact the Kentucky Bankruptcy Lawyers at O’Bryan Law Offices Today
The bankruptcy process can be scary, especially when you’re dealing with constant calls from creditors. You’re already struggling with debt and have a looming garnishment of wages lawsuit. Don’t wait to contact a Kentucky bankruptcy attorney at the O’Bryan Law Offices.
Our team of bankruptcy attorneys has helped countless families throughout Kentucky achieve financial independence through bankruptcy filings. We understand how big of a step is to file for bankruptcy and handle your case with compassion and care. When you file your bankruptcy with the O’Bryan Law Offices, our goal is for you to finally be rid of your debts so you can focus on living a debt-free life.
To begin your road to financial freedom, schedule a free consultation with our experienced bankruptcy attorneys by calling 502-339-0222.