If you can’t pay the money you owe, creditors may take steps to garnish your wages and withdraw money directly from your paycheck. In most situations, both federal and Ohio state laws limit garnishment to 25% of your wages, and most creditors must file a collections lawsuit in court and receive a monetary judgment first. But once the courts give them this judgment, creditors can keep collecting money from every paycheck until the debt is paid.
Having your wages garnished is embarrassing, leaves you even shorter of money, and has other negative effects. It creates a lot of paperwork for your employer, who now knows about your financial difficulties, and it can even cost you your job. Your employer cannot fire you solely because of wage garnishments by a single creditor in a 12-month period or because of a child-support garnishment, but you can be let go if you have multiple garnishments.
What should you do if you are faced with wage garnishment? Your best bet is to seek legal advice. The skilled and seasoned Ohio bankruptcy attorneys at Fesenmyer Cousino Weinzimmer understand that financial problems can happen to even the most well-intentioned people. We offer a free consultation to evaluate your financial situation and come up with a plan to keep your debt problems from reaching the point of wage garnishment and to deal with them if they are already there.
Delaying can only make your situation worse, so contact us online or call our offices to set up your free consultation today.
How Does Garnishment Work?
Once you fall behind on your payments, the courts will give your creditors the money judgment against you which allows them to garnish your wages.
The court will then send you a demand letter requesting payment of the judgment amount. According to Ohio state law, the notice must provide information about options available to avoid wage garnishment. If you do not respond to the demand letter, your employer will give you a notice and wage garnishment paperwork.
There is no way to hide a garnishment from an employer. This can make it harder to get jobs or opportunities at work.
You must return this notice with either a payment or a calculation showing your total earnings are exempt. If you do not return it on time, the creditor can get an order to garnish your pay. All of your paychecks will be garnished until the amount of the judgment has been paid off or your circumstances change.
Most creditors will be entitled to either:
- 25% of your disposable earnings, or
- Your disposable earnings less 30 times the current federal minimum wage
Disposable earnings are the balance of your paycheck that remains after taking out taxes and other mandatory deductions. Voluntary deductions for things like health and life insurance will not reduce your disposable earnings.
Creditors do not need a money judgment to garnish your wages for debts resulting from:
- unpaid income taxes
- court-ordered child support or arrearages
- defaulted student loans — up to 15% of your disposable income
For child support, up to 50% of your disposable earnings can be garnished if you are supporting a spouse or a child who isn’t the subject of the order, and up to 60% if you aren’t supporting a spouse or child. An additional five percent is allowed if you are over 12 weeks behind in support payments.
If you are deep in debt, creditors can take your hard-earned money with the permission of the court. Unfortunately, that can be a strain on your wallet that you may not be able to afford. Contact our bankruptcy lawyers at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati) to learn about better options.
How Can I Avoid Garnishment?
There are several ways to avoid wage garnishment, including:
1) Pay Without Formal Garnishment
Complete the form that comes with your demand letter or notice titled “Payment to Avoid Garnishment” and return it to the creditor within 15 days. You then make periodic payments until your debt is paid, without having to go through formal garnishment.
2) Get a Trustee
File an affidavit with the court asking to be assigned a trustee to take money out of each paycheck to give to your creditors. The affidavit lists the names and addresses of all your creditors, the total amount of each creditor’s claim against you, and the amount you will pay the trustee out of each paycheck. Your creditors will be notified and can no longer garnish your wages as long as you keep making payments. Your employer won’t be involved or know that you’re having financial trouble.
3) Use a Credit Counseling Service
A debt counseling service will calculate a single payment that will be distributed among your creditors and help you build a budget. You pay off your debt over time without having your wages garnished or your employer involved. Use caution if you go this route and do your homework on the company, as not all of the credit counseling services out there are reputable.
4) File for Bankruptcy
Bankruptcy is a way to eliminate many of your debts and get a fresh start financially. The most common types of bankruptcy are Chapter 7 and Chapter 13 bankruptcy.
Chapter 7 allows you to discharge (eliminate) most or all consumer debts, and is completed in around four months, so you can begin rebuilding credit quickly. Chapter 13 reorganizes your debts and sets up a payment plan monitored by the court and a trustee and allows you to keep many assets.
When your bankruptcy case is filed, your attorney will file a document with the court and your employer to stop your lawsuit and the resulting garnishment.
There are advantages and disadvantages to filing under the various chapters, and you will still be responsible for certain debts including child support, spousal support obligations, student loans, and most unpaid taxes. However, bankruptcy can eliminate credit card debt, medical bills, and unsecured loans, and stop garnishment and harassment by creditors.
Limits on Wage Garnishment
Some limits on wage garnishment can help you avoid wage garnishment. The first has to do with contract law. When you owe money to a creditor, that is because you are part of a contract. It may not be a written contract, but that matters only slightly. The important thing is that Ohio has a statute of limitations that applies to lawsuits involving contracts. If there is not a written contract, legal action has to be brought within six years. That doesn’t mean you are off the hook if the creditor fails to bring legal action — it just means they can’t sue you.
The other limit on wage garnishment involves portions of your income that are exempt from garnishment. The following parts of your income are exempt from garnishment:
- Income from Social Security
- Workers’ compensation benefits
- Pension income
- Veteran’s benefits
- Other benefits of federal programs
Additionally, any child support or spousal support payments you are making are deducted from your income.
While all of these exemptions can help reduce the pain caused by wage garnishment, they don’t reduce how much you owe. If exemptions reduce your garnishments from $200 per month to $100 per month, for example, that just means your wages will be garnished for twice as long. You still have to pay the full amount eventually.
Free Initial Consultations for Ohio Residents Facing Garnishment
If you are faced with garnishment of your wages, time is of the essence. If you cannot become current in your payments or make another arrangements with your creditor, you may be able to prevent garnishment by filing for bankruptcy.
Take the first step toward debt relief and contact the experienced and compassionate Ohio debt-relief attorneys at Fesenmyer Cousino Weinzimmer today for a FREE INITIAL CONSULTATION.
We know what you are going through. We will evaluate your entire financial picture by looking at your income, your debts, and your goals, and we will discuss the best fit for your individual situation. We will handle every phase of the process and find what works best for you. We have helped thousands of Ohio residents find new hope and prevent garnishment.
Don’t delay! Take the first step toward debt relief and contact us online or call the Ohio bankruptcy attorneys at Fesenmyer Cousino Weinzimmer at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati) today.
