How Creditors Can Take Money From Your Paycheck

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If a creditor has problems in collecting a debt from you, he has a few options at his disposal. One of them is to sue you and attempt to garnishee your paycheck. What this basically means is that, since he is unable to get the money directly from you, he is asking the courts to force your employer to take money from your paycheck and send it to him. To protect you and prevent abuses by the creditor, however, both the federal and state governments have enacted a set of rules as to how this should work.

Before the creditor can take any money from your paycheck, however, is that he must first win the lawsuit. If the creditor sues and the courts end up rejecting his claim, the creditor is simply out of luck and won't be able to lawfully force your employer to give him money. If, however, the court enters a judgement against you and the creditor prevails, the court can then direct your employer to set aside a certain amount of your paycheck each week and send it to the creditor until the debt is resolved. In legal terms, this is known as wage garnishment or a wage attachment.

It is not the goal of the courts to strip you of all your money so that you become destitute. And that is why there are Federal and state limits as to the maximum amount of money that can be taken from your paycheck. The federal limit is the lesser of twenty five percent of your weekly paycheck or a calculated formula which compares the dollar amount of your weekly paycheck minus 30 times the minimum hourly income. In addition to federal wage attachment laws, all states have their individual garnishment limit laws. These laws, however, cannot authorize more to be taken from the debtor's paycheck than the federal laws.

In fact, some states have enacted significantly tougher wage garnishment rules on creditors than the federal laws do. These laws may either add additional barriers that the creditor has to overcome if they want the courts to rule in their favor. Or, the laws may go much further in limiting the amount of money that can be deducted from the debtors paycheck. In practical terms, what this means is that a creditor bringing a suit against a creditor in Minnesota can expect different results than a creditor filing a lawsuit in Arizona.

A number of employees are needlessly afraid of wage garnishments. Yes, it is embarrassing. But, primarily they are afraid of being fired by their employer when their employer discovers that a creditor has sued them for money. However, federal law expressly prohibits any employer from firing you because your wages are being garnished. And if your employer does fire you, you will have a legitimate criminal lawsuit to bring against your employer to recover lost wages and have your job reinstated.

There is no doubt that wage garnishments are embarrassing for the debtor. But, in a society where debt is such a large part of nearly all financial transactions, it is a necessary tool that allows creditors to be repaid what they are legitimately owed.

Article Source: http://depositarticles.com/

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