What To Do When You Receive A Wage Garnishment

You’ve received a notice in the mail, informing you of wage garnishment. What does this mean exactly? First and foremost, this is in consequence of a debt; if you weren’t aware of this debt, you’ll need to contact a lawyer, as this becomes more complex. If this debt is valid, you have a few ways to approach the situation, outlined below.

First, What is Wage Garnishment and How Does it Happen?

Wage garnishment is a particular kind of interference of funds, typically by a Revenue Officer; it’s like a bank levy, but the debt collector has access to the funds in your paycheck, as opposed to the contents of your bank account belonging to the owner of the judgement obtained. Wage garnishment can come quickly and will be especially damage your financial situation, causing a rupture in your ability pay for other bills and debts. For example, you may have business and personal liabilities totalling $20,000. An RO or debt collector requires a payment of $1,100 per month, and half of the payment subtracts from each paycheck. You could be stuck with what the RO ordered, but consider the following options.

Option 1: Pay it Off, or Make Payments

If you can manage the payments, or just pay off your debt in full, the wage garnishment will be released. This is the simple, no fuss way, but most people that are hit with wage garnishment don’t have the means to make it happen. Taking out a low interest loan could work, but why end up paying more than you owe? You can try to negotiate a payment plan, but more on that in Option 3.

Option 2: File Bankruptcy

We recommend this as a last resort. When filing for bankruptcy, you can’t discharge certain debts, like those from the government. The wage garnishment can most likely be stopped, however. Many seek this out of desperation of wage garnishment relief, but consider your financial situation as a whole, and other options before settling on bankruptcy.

Option 3: Hire a Professional

A professional can have the garnishment removed, and put you on a payment plan that can be around half of the payments assigned by the RO. They know the laws, how to speak to the debt collectors and IRS, and can negotiate a better situation for you. This is the best route, especially if you have a large debt to pay.

The government limits what can be garnished and how much, but the garnishment is still at the very least, a burden, and certainly strains your finances. This happens to millions of Americans – if it happens to you, contemplate your above routes, and get yourself out quickly.

Related Articles

February 18, 2016

The 411 on an Offer in Compromise

Imagine getting a fresh start in your tax life at a huge discount. That’s precisely what the Offer in Compromise program from the IRS offers. It allows qualified individuals with unpaid tax debt to negotiate a settled amount that is..

Read More
Speak to a Tax Professional right away!