Money problems can leave you struggling to pay off your debts. And yet, as soon as you find a steady income to get yourself out of that hole, wage garnishments can suddenly take hold.
When a creditor seizes a big chunk of your paycheck each month, it makes it even harder for you to pay everyone else you owe. It may seem like a recipe for inescapable debt, but there are steps you can take to earn some breathing room. You just need to learn how to stop wage garnishment in California.
How to Stop Wage Garnishment in California
If you fall behind or stop paying on debts such as credit card balances, personal loans, or medical bills you are at risk of wage garnishment. Thankfully, those sorts of creditors must first seek a money judgment from a court before they can touch your wages. There are other entities, such as the IRS, who don’t have to secure a ruling to claim your income. We’ll go over those differences below as we talk about how to stop wage garnishment and which wages can be garnished.
Federal and California laws limit the number of garnishment people or companies that can levy against your income. Federal laws limit the garnishment to 25% of your disposable earnings (also known as net pay).
California law goes further in a way to stop the garnishment and allows a separate guideline of 50% of the amount by which your weekly disposable earnings exceed 40 times the state hourly minimum wage. You may use either the federal 25% limit or the state minimum wage limit, whichever is lower for you. A lawyer working on your side will help you determine which option is right for you as you try to stop the garnishment.
Guidelines on Wage Garnishment for Different Forms of Debt
- Credit Card Debt and Pay Day Lenders: These types of debt, including hospital and doctor bills, can lead to wage garnishment. As mentioned above, there are some legal hoops that the creditors must jump through before they can request money from your employer. They must file a lawsuit against you and seek a judgment stating that the creditor has won the suit and is entitled to a certain amount of money. They can attempt to seize the amount you owe, including interest, from your paycheck each week.
- Student Loan Debt: Federal student loans are some of the most difficult debts to get rid of and are usually even exempt from bankruptcy protection. If you default on a student loan, the U.S. Department of Education can garnish your wages up to 15% of a student loan.
- Tax Debt & Tax Levies: The Federal Government doesn’t need a wage garnishment order to garnish your wages for back taxes owed. They may “levy” an amount that’s determined by your standard deduction and the combined total of your deductions for your (the taxpayer’s) standard deduction. The total is divided by 52. California can also garnish 25% of your wages to pay state taxes. State and local taxes can also be sought by local government agencies.
- Unpaid Child Support: Federal laws limit how the wages are being garnished for child support or alimony to 60% of your net pay. If you’re currently supporting another spouse or child, the limit on garnishment falls to 50% of your disposable earnings. Getting behind on child support will only multiply what you owe. If you fall behind by 12 weeks or more, an additional 5% may be taken out of your paycheck.
Ways to Fight Wage Garnishment in California
You might have the best of intentions to repay your loans and get out from under the weight of debt. Yet, wage garnishment could have your income going to paying off only one creditor and leaving you further and further behind on all of your other loans.
Wage garnishment can also leave you with nothing to live on. Things may seem hopeless, but there are ways to seek relief from the combined effects of debt and wage garnishment. It’s just important to keep in mind that in almost every case your outcome will be better with a legal expert guiding you towards your goals.
Here are some possible options:
Debt Negotiation and Working with Your Creditor
One thing to remember, your creditors usually prefer not to go through the court system to try to recoup the money you owe. They could also lose their money if you decide to file for bankruptcy. So, they are often open to other options.
Contacting any person or company that you owe money to can be well worth the trouble. You might get them to agree to an alternate payment plan that includes a reduction of the overall balance.
Filing a Claim of Exemption
Wage garnishment is often an automated and cold process that doesn’t take into account your or your family’s wellbeing. When the level of garnishment leaves your family with too little to survive on, debtors can start filing an exemption claim.
When you file a claim or a California exemption form, you can demonstrate how much of your paycheck you need to support yourself and your loved ones. That sum is compared to how little you get to take home each week. As you’re filing an exemption, you’ll turn in a financial statement and answer other questions in the hopes of earning a reduction of garnishment, or in the best-case scenario, getting rid of the garnishment altogether.
A bankruptcy attorney can help you build an effective case and deliver the claim to the “levying officer.” In California law, the levying officer is the sheriff’s department in your county. The exemption claim is sent to your creditor and filed with the courts. A judge can make a ruling a short time after it’s filed, but if a creditor files opposition to your claim, the matter will get a court date and is decided by a judge then.
Filing for Bankruptcy to Avoid Wage Garnishment
Filing for bankruptcy may seem like a last resort, but it is actually a preferable solution in some cases. Before a bankruptcy is even complete, you’ll earn an “automatic stay” that prevents creditors from suing you or even badgering you for money during the process.
This stay also includes a notification to your employers that garnishing your wages can no longer be continued until the bankruptcy is settled.
Earning a discharge of debt at the end of bankruptcy will free you from some, but not all of your debt. It’s important to note that it’s not all good news. Many of your possessions can get seized and sold to pay off your creditors, and your bankruptcy will show up on your credit report for 10 years.
Vacating A Default Judgment
One of the fastest ways to stop a wage garnishment is to file a motion to vacate a default judgment. This motion protests the judgment that allowed your wage garnishment and can be entered in several instances:
- You didn’t get the lawsuit summons from creditors in time to have a chance to legally defend yourself.
- A mistake was made in the creditor’s original lawsuit.
- The default on your loan was the result of a justifiable mistake or you have an understandable excuse for being in arrears.
Creditors may refile the lawsuit for a new money judgment, but having the first judgment thrown out may give you extra time to work out a better agreement with them.
Wage Garnishment and Your Employer
You may fear losing your job as your employer is forced to deal with your wage garnishment while doing payroll each week. You can take comfort in the fact that employers are prevented from firing employees with wage garnishments in some cases.
Federal law prevents an employer from getting rid of someone simply because they have a garnishment. However, there is no such protection for someone saddled with multiple garnishments. Losing your job nullifies any wage garnishments. Creditors would have to find other ways to get their money back.
You may be tempted to quit your job simply to stop a wage garnishment or creditors from taking your hard-earned money. Keep in mind that having a job puts you in the best position to one day emerge from your debt. Losing that income can also put you in hot water with other creditors. There are always better options.
Contact a Los Angeles Bankruptcy Lawyer
Wage garnishment is designed to give creditors a route to retrieving the money they’re owed, but the process often puts debtors in an endless cycle of money woes. You may struggle under the weight of one or more wage garnishments and feel you are no closer to financial freedom. Your financial situation may even be going backward.
Before you reach your breaking point, contact the bankruptcy attorney with the Law Offices of Steers and Associates in Los Angeles. We have guided hundreds of clients across Southern California facing similar situations and have helped them earn debt relief from financial obligations through debt negotiation as well as bankruptcy if necessary.
Elena Steers, the founder of the Law Offices of Steers and Associates, has a successful background in earning much-needed debt relief for her clients. She uses her experience in the courtroom to give clients a voice in a process that can sometimes make them feel helpless. Take a moment and read about her extensive experience.
If your wages are being garnished, don’t hesitate to consult with a bankruptcy attorney in Los Angeles
Elena Steers is a highly experienced bankruptcy attorney, the founder of Law Offices of Steers & Associates, and previously worked as a Bankruptcy Trustee Assistant at the Office of the Chapter 13 Trustee in Los Angeles. Her current affiliations include the State Bar of California, National Association of Consumer Bankruptcy Attorneys, and Central District Consumer Bankruptcy Attorneys Association.