One of the more common ways people come to us at Brown and Seelye is when they realize that their wages are being garnished. That startling event usually is just the motivation that is needed to take care of this problem that they have put off for far too long.
How the Debt Got to a Garnishment
People think that only taxes can turn into a wage garnishing situation. That's not true. Any judgment holder -- someone that has sued you for something and won -- can garnish your wages if they choose to.
This means that any credit card debt, any tax debt, an old landlord that didn't get paid, balances due from a reposession, a small claims court matter that you lost as judgment, or even a major lawsuit about a car accident or something else. People are often surprised that a credit card debt can turn into a wage garnishment. It's true. All that has to happen is that the credit card company needs to decide to sue you, which they'll easily win (you promised to pay and then you didn't pay). And now they garnish and it's a done deal.
The Emotions Over Debt Are No Longer a Barrier
Certainly, it is understandable to put off confronting something as murky as a debt problem. There are many emotions swirling around the entire topic. These range from feelings of guilt regarding the over-spending to inadequacy about one's talents as a money manager or income earner. Of course, it's usually topped off by the frustration and anxiety brought on by debt collectors and the ultimate: helplessness over a situation that is regarded as having no perfect solution. As a result, most people do what many of us do when an unpleasant and emotion-filled situation is calling out for our attention: we put it off for another day and move on to something that is less trying.
Only when circumstances come to a head do they demand an immediate response. A wage garnishment is something that takes credit card debt or a judgment not just out of the deep freeze, but throws it on the front burner. Not many people can survive on 25% removed from their take-home pay OUT OF EACH PAYCHECK!!! Just think that is half of your wages each month!
What to Expect With a When they Garnish your Wages
So, what happens once some creditor or collection agency has decided they want to collect from you? Well, first, they have to sue you in a lawsuit. You may or may not know about this going on, depending on how much you've moved around, or how low of a profile you've kept. They win the lawsuit, since you promised to pay, and you haven't paid the creditor yet. With this new victory -- a judgment -- they can now get your money. This can include but is not limited to seizing your bank accounts, and of course, cutting into your paycheck . . . the garnishment of your wages.
Stopping the Wage Garnishment: Options
Bankruptcy will stop your paychecks from being garnished or stealing money right out of your bank account or any other account with your name on it (even it is not your money) without any notice to you. Filing bankruptcy is a quick, powerful solution that is cheaper than trying to settle the judgment for the lump sum they'll demand, saving you thousands of dollars.
There are other ways temporarily stop them from garnishing your wages. First, you can quit your job. This is very effective for the short-term, but doesn't really solve the problem. Of course, you are no longer giving them one-quarter of your pay check, but on the other hand, you are now missing the other 75% of it. Even if you quickly get another job, it's just a matter of time until the collecting creditor finds you and the garnish process starts all over again.
Another possible solution is to pay the judgment. This takes a phone call to the creditor and offer to give them the money they want. You can maybe negotiate, but this entire approach is complicated by two major factors: 1) emotions are very high when you call the people who've been haunting you, often attorneys; and 2) they want a huge lump sum payment, usually more than you'll have available. You can hire an attorney to negotiate the debt, but again, this is helpful only if you have the funds to really settle the matter once and for all.