Debt collectors use wage garnishment as a way to take back the money you owe them. They take the money directly from your paycheck, which can put a great deal of stress on your shoulders. You probably have many questions about this process. How does wage garnishment work? What percent of your wages can be garnished? How do you stop wage garnishment? Is it possible to have garnished wages without notification? In this blog, we answer all these questions and more. In fact, bankruptcy filing is one way to combat the struggles of wage garnishment.
At O’Bryan Law Offices, we know that no matter what the reason for bankruptcy, it is never an easy decision to make. However, filing for bankruptcy helps a large number of people every year in the state of Kentucky. With the help of an experienced Kentucky bankruptcy attorney, we will set you on the right path to financial stability. To schedule a free consultation with one of our attorneys, please call 502-400-4020 today.
How Much of Your Wages Can be Garnished in Kentucky or Indiana?
Different states usually have different laws on specific instances like wage garnishment. In this section, we outline the rules that our clients face in both Kentucky and Indiana.
If you’re behind on payments, a creditor can’t garnish your wages until they first get a court judgment. For example, if you owe credit card debt or medical bills to different creditors, it is not possible for them to garnish your wages without first going to court. However, there are exceptions. It is possible to garnish wages without a court order when you have the following.
- Unpaid income taxes
- Court-ordered child support
- Child support arrears
- Defaulted student loans
Federal law places limits on wage garnishment amounts. These limitations are in place to make sure you have enough money left over for living expenses. Kentucky is one of the few states where federal laws apply instead of stricter state laws imposed by state governments. Keep in mind that “disposable earnings” are those wages left after the required deductions have been made. Below, we list the basic limitations of garnishment in Kentucky.
- It cannot exceed 25% of your disposable earnings in that week.
- It cannot exceed more than 30 times the Federal minimum wage.
As of July 2014, Indiana law has updated its wage garnishment limits to provide more protection for debtors in the state. For the most part, Indiana follows federal regulations (in other words, it mirrors Kentucky). However, one exception exists, which we list below.
- If the individual shows good cause as to why the amount should be reduced, the garnished amount could be less than 25%. However, it must still be at least 10% of their disposable earnings.
How Can I Stop Wage Garnishment?
A few ways exist to prevent wage garnishment. The first way is ideal, but not always possible. Paying off your debt to your creditors cuts them off at the pass, meaning the garnishment will no longer happen. Most creditors try other options before going straight to court. However, if paying off the debt is not possible in your situation, we list other options below.
- Contact your creditor. Try to come up with some sort of payment plan or agreement that works for the both of you. If necessary, have your attorney present. In many cases, creditors are willing to work with their debtors, so try this first.
- Paying off your debt within 10 days of the court’s judgment invalidates the writ of garnishment against you.
- In cases where the garnishment is too harsh and does not allow you to pay for basic living expenses, you can appeal to the court. File a claim of exemption, then work with your attorney to prove why the garnishment is too harsh. If the court agrees, they set aside the original garnishment order and draw up a new one for a lower percentage.
- The final option is filing for bankruptcy. After you file, the automatic stay goes into effect. This legally prohibits all creditors from collecting on your debts.
How Do Salary Deductions Affect Wage Garnishment?
Along with third-party deductions, employers sometimes take paycheck deductions. However, federal law prevents certain deductions if they will reduce the employee’s earnings to below the minimum wage. The Fair Labor Standards Act states that employers cannot deduct the cost of items that primarily benefit themselves if it causes the employee’s wage to fall below the minimum wage. Below, we list specific actions an employer cannot take if it causes the employee’s wage to fall too low.
- Having an employee reimburse the employer for damaged tools or cash shortages
- Requiring employees to pay for customers that walk out on bills
- Requiring employees to buy uniforms or tools for their job
What Are Your Rights in a Wage Garnishment?
Most cases require a court judgment before a creditor may garnish your wages. They cannot start garnishing your wages whenever they like. Then, your employer must notify you of the garnishment and give you information on how to protest it. Additionally, an employer may not fire or retaliate against an employee due to the wage garnishment.
How to Object to a Wage Garnishment?
It is possible to challenge a wage garnishment from your creditors by raising an objection. The procedures necessary to object depend on which type of debt the creditor is attempting to collect. It also depends on the laws of your state. In general, however, the process begins with filing paperwork. If you believe that your wages are partially or fully exempt under federal law, state that within your written objection. In other cases, you might be able to claim that you already paid the creditor or that you received a bankruptcy discharge.
Call O’Bryan Law Offices Today
Don’t wait until it’s too late. Call O’Bryan Law Offices today to schedule a free consultation about your situation. Our Louisville bankruptcy attorneys have helped thousands of families and individuals file for bankruptcy, stop foreclosure, and even eliminate their credit card debt. No matter what your situation, you have options. We offer personalized service and plans to every single client, and we can’t wait to get you on the path to financial recovery. If you find yourself searching for “bankruptcy Chapter 13 lawyers near me,” then it’s time to contact us. Call our office today at 502-400-4020.