Can My Creditors Really Take My Paycheck?

When you owe a creditor any money, you may be leaving yourself open to having your paycheck garnished as recourse for your owing a debt. The reality of the wage garnishment is that the law regarding a creditor’s rights to your paycheck is governed by the state you live in. Different states hold different laws about the way creditors can collect on a debt, seize property, and garnish wages.

What Is a Wage Garnishment?

A wage garnishment is a legal order of the court granted to a creditor that allows a garnishment of wages for debtors who owe an uncollected balance. In layman’s terms, a creditor is legally allowed to automatically get part of your paycheck each week until the debt is fully satisfied. An employer will receive the order that states the amount of money to be taken from each pay and where the money should be sent. Employers who refuse to follow the garnishment order are subject to serious legal hassles for not following the law.

How Much Can They Take?

The individual states also make the determination as to just how much money creditors can take from your paycheck. In some states, wage garnishments are not allowed at all. In others, a creditor can take virtually all of the money minus a few bucks to cover living expenses. In addition to state regulations, there are also federal guidelines that must be followed and states may follow those rules in regards to garnishment law.

Who Can Take It?

Depending on your state law, credit card companies, medical providers, and even debt collection agencies can seek to obtain a wage garnishment in order to recover the balance owned. The only entities that can establish a wage garnishment despite any laws is when an individual owes money to the state or federal governments.

What Can Be Done?

In order to avoid a wage garnishment, you can agree to pay the debt in full before further action is taken. You may also be able to negotiate a debt settlement with the creditor if you don’t have the full amount of cash to pay the debt entirely.

If you are so financially strapped you can not afford to pay off any portion of the debt, you may be able to avoid a wage garnishment by filing for bankruptcy. Most debts can be eliminated through a bankruptcy. However, if you owe student loans, child support, or tax debts, a bankruptcy will not help you.