We’ve all been there. You have had a rough patch where your income wasn’t as high as you’d like—and of course, your bills were higher than you’d like. But, now you have a better paying job and you’re getting back on your feet. That is, until you open up your paycheck and find that a quarter of it is missing.
What happened? Your credit card company has garnished your wages. Wage garnishment—the legal process that lets a creditor take your money to pay a debt you owe—is more common than you may think. One in 10 working Americans between the ages of 35 and 44 are getting their wages garnished. That means their pay is being docked—often over an old credit card debt, medical bill or student loan.
Can they really do this?
Yes, they can. Federal law allows creditors to garnish wages to collect their money. In the past, the garnishment process was used primarily for collecting child support and back taxes. These days, for workers earning $25,000 to $40,000 a year, more people were garnished for consumer debt than for child support.
Even in Oregon?
Yes. Federal law gives states the option of protecting a larger portion of a debtor’s paycheck. Most states have done this; however, Oregon is not one of them. For the most part, creditors with judgments can take only 25% of your net wages after required deductions in Oregon—which is at the federal limit. Some states have banned garnishments altogether, while 28 states have made some protections that reduce the amount that can be garnished—but not in Oregon.
How long will my garnishment last?
Your garnishment continues until the debt is paid in full with interest.
Can chapter 7 bankruptcy stop the garnishment?
Yes. When you file a chapter 7 bankruptcy case, there’s an automatic stay feature that prevents all collection efforts. This prevents a garnishment that has not yet been accomplished or will stop one that has already gone into effect. For example, if you’ve been notified that your credit card company intends to garnish your wages, filing bankruptcy should stop the employer from taking the money from your paycheck. The automatic stay usually goes into effect the same day your bankruptcy case is filed.
What can I do about it?
There’s a quote from David Feherty that reads, “It’s how you deal with failure that determines how you achieve success.” You can do something about it. Contact an experienced bankruptcy attorney to see what your options may be. Although bankruptcy isn’t the solution for everyone, you can learn about your options and develop a plan to improve your situation.