What are the next steps after you’ve received a wage garnishment notice? Here’s what to do– and how to stay compliant while doing it.
So, you’ve just received a wage garnishment notice. Now what? For business owners and HR leaders, a wage garnishment can cause confusion regarding procedures and paperwork. We’ve answered the most important questions HR professionals need to know to navigate the wage garnishment process successfully.
Can you stop a garnishment once it starts?
Once you’ve received a garnishment, you have a few options. However, you must act fast. If you wait too long to challenge the garnishment, you’ll lose the ability to contest the debt in court. In some states, individuals only receive five business days to contest the ruling. Here are a few situations in which you may be able to stop the garnishment:
- You weren’t legally notified of the garnishment
- The notice contains inaccurate information about you or your debt
- You only receive exempt income, such as Social Security or veterans benefits
A personal loan is another potential way to stop the garnishment. Using a personal loan to pay off the debt will stop long-term garnishments from your paycheck. Of course, you’ll still be responsible for the personal loan. However, this removes your employer from the equation and restores your control over your income.
How much money can be garnished from a paycheck?
Creditors can take a percentage of your weekly disposable income. According to the Department of Labor, “if the pay period is weekly and disposable earnings are $217.50 ($7.25 × 30) or less, there can be no garnishment.”
However, if disposable earnings are more than $290, 25 percent can be garnished, which is the absolute maximum. When pay periods cover more than one week, multiples of the weekly restrictions must be used to calculate the maximum amounts that may be garnished.
Can you negotiate a wage garnishment?
Before accepting your fate, contact your creditors first. Many creditors are open to negotiating a payment plan. Those facing a garnishment should figure out what they can pay based on what they owe and use their power to negotiate.
Depending on the type of debt, not all will be receptive. However, it’s always worth a conversation.
Are garnishments public record?
A wage garnishment will be noted on your credit report for up to seven years, which will impact your credit score and show up in public records. Anyone who searches for this information will have access as a federal court order was given to garnish your wages.
Banks and other financiers can access this information if you attempt to apply for a loan or rent a home. A wage garnishment can negatively impact your ability to do these things for up to seven years until the garnishment drops off your record.
It’s critical to pay your debts and avoid a wage garnishment whenever possible. In addition to the adverse effects on your credit, employers also take a hit. Wage garnishments mean more paperwork and a larger administrative burden for the employer.
Understanding these common questions will help employers and HR leaders navigate the wage garnishment process when they receive a notice. Being prepared will help cut down the confusion and orchestrate the process smoothly.