A Closer Look at Legal Aid for Wage Garnishment: Your Path to Financial Freedom

The Basics of Wage Garnishment

Wage garnishment is a legal procedure frequently used by creditors to ensure full repayment of debts owed. The process involves a court-ordered reduction of disposable income until the creditor is repaid. It is typically enforced only after a creditor has obtained a judgment against the debtor in question. A final judgment is necessary for wage garnishment, regardless of the type of debt. Once in place, wage garnishment will continue until the debt is paid, unless one of the following exempted situations occurs:
Garnishment is a matter of state law; therefore, the rules and regulations that oversee the garnishment process vary by state. Most garnishment orders last for 16 weeks , although courts can extend them for longer if they find it necessary. Although there are a number of exemptions in place, it is ultimately up to the court to determine whether or not wages need to be garnished.
Creditors most commonly initiate garnishment proceedings due to missed child support payments, credit card debt, unpaid rent, student loans and unpaid taxes. Currently, the maximum amount that can be withheld from a person’s pay is 25 percent of disposable income, the amount of money an employee takes home after taking out taxes and mandatory retirement contributions.

The Consequences of Wage Garnishment for Individuals

Wage garnishment can impose numerous financial and emotional hardships on individuals. Since creditors can potentially take away up to 25 percent of a person’s disposable income, the loss of income can lead to crushing debt and some families even end up on government assistance programs just to get by. The direct loss of wages can be a debilitating financial loss—coupled with the loss of any even minimal lifestyle changes since so much income is taken that even basic necessities must be sacrificed by many. In the long run, the continuous threat of losing your wages may lead to a loss of employment as employees frequently bullied by collection agencies tend to be less productive and likely to leave the company they work for. Additionally, the stress involved with struggling to pay basic bills may lead some individuals to toxic coping mechanisms such as alcohol and drug use. Chronic stress can also lead to depression and other mental health disorders. Further, the loss of income may lead some individuals to give up businesses and career opportunities simply because of the constant battle with garnishment by multiple creditors. The loss of an ability to live independently, control one’s finances, and pursuit of career or business opportunities can lead to considerable emotional damage as well—further harming the individual and potentially leading to the relationship, family, and marital problems.

Legal Protections Against Wage Garnishment

Coping with unexpected deductions from your paycheck can be challenging, but even more so when you realize those federal and state debts can actually result in a levy of your bank account. So the question becomes, "what legal rights do I have against wage garnishment or a bank levy?"
It’s important to first understand that there are federal laws in place via the Fair Labor Standards Act (FLSA) that limit how much money can be taken from your earnings. Under these federal laws, there are strict limits on how much money can be taken from your paycheck for tax payments, child support, or student loan payments. What’s crucial to understand is that state and federal laws limit the amount that can be taken from your paycheck, and even more so, if those limitations are exceeded, you do have the right to pursue any overages with a lawyer. There are protections in place to even further protect you. For example, 15 U.S.C. section 1673 limits the amount of money for any indebtedness owed to a private creditor such as credit card debt, auto loans or medical bills. This limitation cannot exceed 25 percent of your disposable earnings and applies only to those debts. The exceptions When it comes to certain debts, courts are often more lenient and thus, creditors have leeway to garnish an employee’s earnings. In fact, for several debts, such as child and spousal support, there are no federal protections, however, each state varies on what they will allow. For instance, in Ohio, for child support orders issued after October 20, 2014, 55 percent of weekly earnings could be garnished when an employee does not support another spouse or child. However, if the employee does support another spouse or child, the maximum amount that can be taken is 40 percent of the employee’s disposable earnings. Bank levies Just like wage garnishment, bank levies can be issued against any bank account. Like garnishments, there are limits with limits. Garnishments issued by federal agencies to collect unpaid debts such as student loans are a little different than a private creditor. Under federal law, specifically 15 U.S.C. section 1673(b), the maximum amount that may be levied from a bank account is 1000.00 per annum. To breach this amount, the creditor must have obtained a court order. Next steps with a bank levy When a bank levy garnishment is issued by a creditor, typically, it will send a notice to you informing you of the levy. While there are no strict guidelines from the IRS regarding the manner in which notice must be provided, the federal agency must inform the debtor at least 30 days before a levy is issued. If the IRS did not provide sufficient notice of the amounts owed or when the levies will commence, you have the legal right to seek legal aid for wage garnishment and review of the bank levy petition. When dealing with private creditors who have filed for a bank levy, creditors must delay any seizure of bank assets for 14 days. This is where you can seek help through the legal system to halt or reverse the garnishment.

How Legal Aid Can Assist You

Legal aid is an invaluable resource for those facing wage garnishment. Through various programs, legal aid can provide guidance, representation, and support. Whether through advice clinics or hotlines, funding from your local or state government ends up supporting these programs. Legal aid may even provide workshops and other events to attend, or create pamphlets and flyers with helpful information. Even if you have doubts or hesitations about getting assistance from legal aid, try it! They are great at explaining your options in a way that you can understand, and helping you choose the best action. More importantly, they will be able to inform you of your rights and the limits on wage garnishment and other debt collection practices. If nothing else, you want to know what debt collectors and lenders can legally do to make sure that you keep safe from harassment.

How to Access Legal Aid

The first step in finding legal aid is to research available programs in your area. A good place to start is the American Bar Association’s directory of Legal Aid and Pro Bono Programs. Eligibility criteria for programs can be strict, so you may need to apply for aid from more than one organization. Once you have found a program you want to pursue, contact them to inquire about eligibility and documentation requirements. A poverty threshold, generally based on federal poverty guidelines, may be used to determine your eligibility for legal aid, so you will likely need to provide information and documentation regarding your income and necessary expenses . Your attorney will be required to determine if the fees incurred in pursuing a claim outweigh the potential benefit of winning. If you are simply looking to get your wages garnished, for instance, you may not qualify for aid. For those who do not qualify for legal aid assistance but still cannot afford the attorney fees commonly associated with wage garnishment claims, a contingency fee arrangement may be a valid option. In a contingency fee arrangement, your attorney does not get paid unless they successfully settle or litigate your claim.

Alternatives to Wage Garnishment

While the ability of a creditor to obtain a garnishment order can be a useful tool for creditors to obtain payment to the debt to a creditor, there are alternatives to wage garnishment. An individual who is facing multiple actions from creditors may consider these alternatives:
Negotiation with your debtor:
One alternative to wage garnishment is negotiation with the creditor to seek some voluntary change in the terms of the debt. If the debtor is still consumer debt relative to credit card companies, some creditors can offer lower monthly payments or settlement of the debt in a lump sum payment in exchange for a reduction in the principal balance. (While the practice is not always allowed, if you’ve gone to court and had a judgment issued, you can usually negotiate with the same creditor again to satisfy the remaining balance). Negotiating a reduced payment plan can also be an alternative to garnishment. However, creditors are often reluctant to make such changes to the payment plan after judgment has been issued. (If the creditor doesn’t agree, it is rarely a matter of law that prohibits the creditor from renegotiating the payments, but instead simply unwillingness to do so.) If the creditor won’t agree, the other options below may be necessary.
Debt consolidation:
Another alternative to garnishment is debt consolidation. This option involves taking out a loan to pay off the debt to the creditor. This option can be beneficial to individuals who have many creditors, have a large amount of debt to multiple creditors, and have high interest rates. Just as negotiation with a creditor can lower the required monthly payments, debt consolidation can decrease the monthly payment amounts. However, if you need to consolidate loans to bring down the monthly payment amount (i.e. you may not be able to afford your debt payments at all due to the interest rate), keep in mind the debt consolidation will require you to take on another loan that may have a longer repayment term at a different interest rate. (This is so whether the person consolidating debt is doing so on their own, or working through a debt assistance company that markets themselves as offering loan consolidation).
Bankruptcy:
If a person cannot afford the payments necessary to a creditor (and it is important to note that lowering a monthly payment does NOT mean that the person can afford to pay the remaining balance), bankruptcy may be the only option. Bankruptcy can provide an immediate stay against most creditors seeking to collect on outstanding debts (other than creditors who have a special right to collect despite an automatic stay, such as the IRS). While the automatic stay does not permitted creditors to automatically collect on the debt, generally, the debtor must complete the bankruptcy process (such a Chapter 13 or Chapter 7) before the debt is discharged as unsecured, and creditors are no longer permitted to seek collection on the debt when the bankruptcy court has ordered that the debt is exhausted. Depending on the type of bankruptcy, the debtor may lose assets in the process.

Finding the Right Legal Aid Program for You

When you’re facing wage garnishment, it’s important to find a legal aid service that you can count on to help you through the process. Here are a few tips for choosing a reputable legal aid service: Find out how long the organization has been in operation. Legal aid organizations that have been in existence for many years are likely to be good options. If you have a public legal aid service in your local community, they may be a suitable option. Check your state or local government’s website for public legal aid information. Look online for reviews and ratings of legal aid services. Legitimate organizations will often have reviews available for potential clients to look over. Seek advice from friends, family and coworkers who may have used legal aid services in the past. They may be able to give you valuable insight and information. Ask to see the legal aid organization’s credentials and licensing. Reputable organizations won’t hesitate to show you their licenses and any other relevant credentials. Don’t pay for a consultation with a legal aid service. Most legal aid services don’t charge for an initial consultation, so be wary of those that do. Don’t allow yourself to get pressured into making any decisions if you don’t feel comfortable about the legal aid service and what it may be able to do for you. Don’t fall for high pressure sales tactics. Legitimate legal aid services won’t apply pressure to you during your initial consultation. Be wary of any legal aid services that require you to pay large lump sums upfront. It’s a good idea to shop around and interview potential legal aid services before you decide to go with one. You should also make an effort to locate any regulatory authorities pertaining to the legal aid services in your area. It’s a good idea to review the legal aid service’s reputation and search for any potential complaints before making a decision. A common example of a type of legal aid (in addition to wage garnishment aid) is bankruptcy assistance. Legal aid services provide individuals with bankruptcy assistance at little or no cost depending on their requirements and qualifications.

Frequently Asked Questions on Legal Aid for Wage Garnishment

What should I do if I don’t have the full amount of a garnishment withheld from my paycheck?
If you receive an income assignment notice for child support or spousal support, the employer is required to withhold the full amount ordered, without regard to how much is currently owed. If you don’t have sufficient funds for the withholding, let the employer know and see if you can work out a payment plan. If the employer is not amenable to your proposal, you will need to follow up with the court and possibly request a hearing to reduce the amount withheld.
Can my wages be garnished without a court order?
Generally no. A court will have made a determination as to the amount, if any, that is due, and will have issued a judgment for that amount. Child support cases may be different depending upon the office of the Attorney General’s involvement.
How long do income assignments (garnishments) last?
They typically last until your support obligation is satisfied and then process will stop . There is some indication that the obligation must be fully satisfied, however, we tend to err on the side of caution and keep them open indefinitely.
Can the employer drop the income assignment?
The employer is obligated to comply with the income assignment. However, if they are not involved in the collection process, it may be possible for them to drop the case if you file the appropriate paperwork.
Can other creditors still garnish my wages or bank account?
Not unless they have a court order awarding them the ability to garnish. Generally, anyone seeking to garnish wages must get a garnishment order.
If a wage garnishment occurs, will I be notified?
Yes, a notice will go out from the court informing you that a garnishment has been issued. If you work for a private employer, the employer will still confirm receipt of the garnishment and confirm that the money has been withheld or if there are any difficulties with withholding the amount.