Garnishment and Unsecured Debt
When debts seemingly appear to just pile up and the debtor is already too stressed to cope up with the payments, some tend to skip on their obligations. Most common things that people tend to run away from are credit card debts, child support, student loans, taxes, medical bills and utilities. These kinds of debts are categorized as unsecured debts which can be subject to wage garnishment.
Unsecured debts are debts which do not have collateral. There are no assets to be sequestered or liquidated, therefore, more risk for the creditor.
Wage garnishment is a way of collecting debt owed by a debtor through a third party. A creditor can impose a wage garnishment on the creditor by securing a court order. The court order will then be sent to the employer of the debtor and the employer will then deduct the debt from the debtor’s salary. Other forms of garnishment are by taking the payment from the debtor’s bank account or it can also be taken against the debtor’s property.
Points to remember in Wage Garnishment
A) The California Wage Garnishment Law mandates that an employer can only deduct from an employee’s/debtor’s salary if:
- It is has been ordered by the court and the law (state and federal).
- Requested by the employee. This has to be done in writing and is meant to pay debts like insurance premium, medical bills, and other deductibles that are not subject to reimbursement or deduction from the salary paid to the employee.
- Any abatement that have been sanctioned by a collective bargaining agree or salary agreement; mainly focused on pension, benefit and healthcare payments.
B) Wage garnishment is computed as 25% of the total disposal income in a workweek of the employee or 30 times the minimum federal wage whichever is lesser.
Advice on Wage Garnishment
Debtors risk embarrassment since their employers are informed of their financial situation. There is even a risk of getting fired if the debtor’s employer has been served a 2nd and 3rd garnishment order by the court.
Once the garnishment has been ordered, the debtor is faced with little or no options. The main recourse would be to ask the judge to lessen the garnished amount. Garnishment also leaves a bad record on the credit report and a much lesser income.
The best thing to do is always stay on top. Do not default on payments. If that is not possible, it is best to consult a lawyer to advise you on the steps to take.