Understanding How a Wage Garnishment Can Affect Your Paycheck
Wage garnishments are one of the most commonly used debt collection methods. This process usually begins when a creditor presents a garnishment order to an employer. A valid order requires an employer to withhold a certain amount of money from the employee's paycheck. The employer (via the payroll department) will transfer these funds to the creditor to satisfy the debt. This is a basic description of the process, however there is more to know about wage garnishments.
Which Creditors Can Use Wage Garnishments
It can be a relief to know that not just anyone can initiate a wage garnishment. To take advantage of this remedy, a debtee needs to qualify as a judgment creditor. This means that the creditor will first have to file a lawsuit and win in court. Doing so allows the creditor to obtain a judgment for money damages. This judgment is enforceable through the wage garnishment. Due to this, you will have a fair amount of notice before a wage garnishment occurs.
Exceptions to the Rule
There are some situations where a party who is not a judgment creditor can use a garnishment. This generally occurs when a government agency is a creditor. Examples include the IRS or state child support agencies. Such organizations are not required to obtain a judgment before attaching your wages. However, they may have to comply with notice requirements before taking action. Therefore, you may be able to make payment arrangements or dispute the debt before the garnishment.
Are There Any Applicable Limits?
You may wonder how much a creditor can garnish from your paycheck. In short, there are limits to the amount that a creditor can deduct. Utah law limits a creditor to a maximum amount of 25 percent of the debtor's disposable income. In the alternative, a creditor may receive an amount equal to an excess of 30 times the minimum wage. The creditor will be stuck with whichever amount is lesser.
When looking at the second threshold option (30 times the minimum wage), it can help to add further explanation. This standard intends to leave the debtor with enough money to meet his or her basic living expenses. Thus, the law leaves the debtor with an income equivalent to 30 hours of work at minimum wage. Any amount over this can be garnished.
It is also important to understand the meaning of "disposable income." This term refers to all the money left over after deductions occur. Only deductions mandated by law will count in this amount. An experienced lawyer can help explain this concept further.
How to Fight Back
If you believe that a wage garnishment is unjustified, you may have legal options. First, it is important to make sure that the debt is valid per the statute of limitations. Title 78B of the Utah Code contains the applicable statute of limitations for written and oral contracts. If a judgment creditor does not initiate a lawsuit in time, it may be illegal to collect on the debt.
In addition, a debtor may be able to fight the garnishment directly. There is a legal process that must be followed in order to begin a garnishment. If this process is not carried out correctly, the debtor can invalidate the garnishment. It is important to speak with an experienced attorney for specific legal advice in this regard.
To learn more about business law matters or contract litigation, get more information from the Law Office of TR Spencer.