Imagine getting a notice from your employer stating that your wages have been attached and you will be receiving less in your paychecks for the foreseeable future. With a little bit of research, you discover that your wages have been garnished to pay an outstanding debt. Wage attachment is being used against you by the other party.
Now, imagine being on the other side. You are the creditor seeking to get paid a legitimate debt. You have chosen wage attachment because it is the easiest and most cost-effective collection method. You realize you will have to wait some time for the debt to be fully paid, but you are willing to continue with wage attachment until it is.
It turns out that wage attachment is pretty common in this country. It is utilized to settle a variety of outstanding debts. This post will discuss three of them.
1. A Money Judgment
The first type of debt is a money judgment. A money judgment is a financial award handed to the winner of a civil lawsuit. For example, a landlord might sue a former tenant for several months of unpaid rent. The court, finding in favor of the landlord, awards him the back rent plus his court costs and attorney’s fees. That total amount of money is the money judgment.
Most states allowed judgment creditors to attach the wages of their debtors. With a writ of garnishment in hand, a creditor can seize a certain portion of the debtor’s wages for payment. The garnishment can continue for as long as the debtor remains employed and any portion of the debt remains outstanding.
According to Judgment Collectors, a Salt Lake City, Utah judgment collection agency, it can take a considerable amount of time to satisfy a sizable judgment through wage garnishment alone. Nonetheless, the agency says wage garnishment is fairly common as a means of collecting unpaid judgments.
2. Child Support and Alimony
Child support and alimony – alimony is sometimes referred to as maintenance payments – are taken seriously by the states. State laws typically allow former spouses and children to attach up to 50% of the debtor’s wages to settle back payments.
Some states allow higher amounts if the debtor in question has no other dependents or is significantly behind on his payments. Other states allow garnishment even if a debtor is not behind. In such cases, garnishment is utilized as a way to guarantee the debtor never falls behind.
3. Tax Debts
Wage attachment is available to both federal and state taxing authorities when debtors make no genuine attempts to pay back taxes. Wage attachment at the federal level is the most severe, because the IRS can take nearly all of a debtor’s income, minus the standard deduction plus any deductions for the debtor’s dependents.
Compare this to wage attachment for a money judgment. The states typically allow judgment creditors to garnish no more than 25% of the debtor’s disposable income, not total income. Yet the IRS can take almost all of what a debtor earns.
How to Avoid Wage Attachment
Wage attachment can be a scary thing to face. The best way to avoid it is to simply pay your bills. Making good on what you owe eliminates any need for another party to garnish your wages.
It is worth mentioning that creditors don’t necessarily enjoy garnishing debtor wages. Yet they also do not want to write off outstanding debts. If wage attachment is the best way to guarantee they get paid, so be it. It is far better than some of the alternative solutions for collecting debt.