Wage garnishment, which is governed by Title III of the Consumer Credit Protection Act (CCPA), affects people in all 50 states and can be enacted at both the state and federal level. This process can significantly impact your day-to-day life, as it may take much-needed money from your paycheck. In 2016, the federal government collected nearly $55 million via this penalty. So what is wage garnishment and how do you dispute and fight it?
To begin with, wage garnishment occurs when the Internal Revenue Service (or another creditor) orders an employer to deduct wages from an employee – who is in debt to the government or another institution – for the purposes of paying off a debt. The deductions continue until the debt is paid off. To begin the process, the IRS must send a written notice (called a garnishment order) to the employer, who must then notify the affected worker before removing funds from their paycheck. In general, the IRS garnishes 70 percent of a person’s wages, after submitting a garnishment order. In most cases, a creditor must obtain a writ of garnishment from a judge, but this is not absolutely necessary in every case, as the IRS has the right to pursue garnishment of its own accord, without input from the judiciary.
The employer must comply with the request, and they must inform the employee about any available methods for disputing the garnishment. To that end, there are at least three possible ways a person might find relief from such wage reductions. First, if the affected party can prove that the garnishments are preventing him or her from buying things needed for daily life, the court might decide to stop the process altogether or choose to reduce the garnishment.
Secondly, you can opt to pay the owed amount. Once you do, you can get an IRS Wage Garnishment Release – meaning your wages will no longer be garnished. Lastly, you can negotiate with the IRS, using what is known as an Offer in Compromise (OIC). Using the OIC, you can potentially agree to paying a lower amount.
In the end, it’s advisable to work out a solution directly with the IRS or the creditor, rather than wait until the end of the garnishment process to commence a dispute. You can, for instance, propose a payment plan that works for both parties. If this isn’t satisfactory for the creditor, you might have to pursue other tactics.
Disputing Court Orders
If a (non-IRS) creditor is seeking to recover a debt, they can, as mentioned, get a court order, which means you’d have a right to appeal. As proposed by CNN Money, you might be able to dispute a writ of garnishment at the outset.
So how do you dispute a judgement? If the court order is served at an old address, you might be able to stop the process based on that mistake. You can also read through the court order, keeping an eye out for any errors. If you happen to spot an oversight, you can reach out to a skilled attorney who understands the nuances of garnishment law. They can guide you through the next steps.
Paying It Off
Of course, as mentioned, you can always pay off the debt. There are a few ways you can do this. You can use savings to cover the amount, although this may not be possible for any number of reasons. Alternatively, you can take out a low-interest loan to pay off the debt. If for instance you’re paying off a credit card with a 36 percent interest rate, you might benefit from taking out a loan that has a five or even ten percent rate.
In the end, if you’re dealing with garnishment, it’s a good idea to consult an attorney. Employment lawyers can help with wage garnishments. If the IRS is seeking to recover a debt, you might benefit from the insight of a skilled tax attorney – someone who understands the ins-and-outs of US tax law.