If a creditor obtains a judgment against you, there is a chance that your wages may be garnished. There is also a chance that you will be required to pay fees and interest on top of the principal balance owed. However, there are steps that you can take that may prevent your money from being redirected to a mortgage or credit card company.
Negotiate a payment plan
As a general rule, your creditors would rather be paid in small increments as opposed to not at all. Therefore, you may be able to work out new payment terms that fit into your budget better. You should be aware that it’s not guaranteed that a lender will agree to your proposal. Furthermore, a wage garnishment may continue until a new payment plan goes into effect.
File for bankruptcy
When you file for bankruptcy, creditors are temporarily prohibited from garnishing your wages or taking other steps to collect a debt. If the debt that was being repaid through a wage garnishment is discharged in a bankruptcy proceeding, the garnishment will come to an end. Generally speaking, Chapter 7 bankruptcy can eliminate credit card, medical or other unsecured debt balances.
Challenge the legitimacy of the garnishment
It may be possible to dispute an order to garnish your wages if it causes undue financial hardship. You may also choose to challenge an order because there was no legitimate reason to put it in place. In most cases, you will only have a few days to appeal a decision to seize a portion of your wages.
If you are trying to obtain debt relief or put a stop to wage garnishment, it may be worth filing for Chapter 7 bankruptcy. A bankruptcy law professional may be able to explain the specific benefits of doing so, such as the potential to obtain a stay or a discharge of existing debt balances.