Knowing the consequences of wage garnishments is essential whether you have a personal finance problem or not. This will give you a better understanding of the options available and help you avoid the adverse effects of these charges.
Child Support
Whether you’re a professional employer organization or just an ordinary person, you might wonder how to manage wage garnishments for child support. The federal government, as well as the state government, will enforce child support orders. Depending on your state, you can have your employer withhold up to 60% of your disposable earnings.
You can request a modification hearing if you fall behind on child support payments. You may also want to consult with a legal aid lawyer.
In some states, a custodial parent can file a lawsuit for unpaid child support. The court will determine the amount of child support that should be collected, and you will be ordered to pay the money. However, if the parent fails to pay, a judge can order the noncustodial parent to pay a lump sum.
Wage garnishment is an essential tool for collecting overdue support. You’ll be notified if your employer receives a court order to withhold your wages. The process is coordinated with your state government’s child support agency.
Depending on your state, the child support agency will send a letter explaining the garnishment or respond with instructions on withholding money. You may also be required to report lump-sum payments to the agency.
To correctly manage wage garnishments for child support, you must know when to report payments. The best practice is to make your payments at least a few weeks before they are due. This gives the child support agency more time to notice you.
Unpaid Taxes
Whether you owe taxes or you are under investigation by the IRS, there are steps you can take to manage wage garnishments and your unpaid taxes. These steps will vary depending on the type of levies you are facing.
First, the IRS will send you a third-party contact notice letting you know they intend to take some of your income. The IRS may seize your assets, including your bank accounts, property, and wages. The IRS often lets you keep some of your money for living expenses.
The IRS may also levy your bank account. However, you can stop the levy by setting up a payment plan if your funds are seized.
Bank Levy
Using a bank levy to collect on a debt is a powerful collection tool. However, there are some defenses to a levy, and you need to know how to fight one.
The most effective way to prevent a levy is to pay your taxes. This may involve a one-time lump sum payment or smaller payments over time. The amount of money you owe the IRS is often based on your “disposable earnings.” This is the amount of money left after you’ve paid all legally required deductions, such as state and federal taxes. The IRS levies against several sources, including wages, dividends, social security, student loans, and rental income.
There are ways to avoid a levy, but it is more complex than calling your lender and telling them you won’t pay. For example, your bank may freeze your account for up to 21 days, which means that your account cannot be used while you’re trying to pay off the debt.
Using a levy to collect on an unpaid debt can be expensive. It takes months and can affect your credit history. You may also be left with disputed funds. However, if you have a good defense, you can keep your money and avoid the hassle of a levy.
The best way to prevent a levy is by getting your bank all the pertinent information. Unfortunately, your creditor may not notify you that a levy is coming, so you should contact your bank to explain the problem.
Filing for Bankruptcy
Whether you’ve received a court judgment for debt or a garnishment notice, bankruptcy can help you get a fresh start. Filing for bankruptcy can stop some wage garnishments and allow you to erase some debts. Whether you’re trying to get rid of medical bills, credit card debt, or student loan debt, bankruptcy can help you take control of your financial situation.
Wage garnishments can be an indicator of a difficult financial situation. They can be caused by unpaid medical bills, broken leases, auto loan deficiency, or credit card debt. If you’re concerned about this, contact your creditors and find out if they’re willing to work with you.
Some creditors may agree to a reduced payment or deferment. Others will sue you for the amount you owe and garnish your wages. The number of your wages subject to garnishment will depend on the state where you live. Generally, creditors in Colorado can take up to 25% of your paycheck after taxes, insurance, and interest are considered.
Common garnishments include income tax, child support, alimony, and student loan debt. Wage garnishments can stretch your budget and make it difficult to make ends meet. You can object to wage garnishments by filing a protest with the IRS and attending a hearing.
In some states, you can file a state court motion to vacate a garnishment, and this can limit the number of wage garnishments. You’ll need to show that you’re exempt from garnishment by proving that you need more money than what is being taken.
