Many people eagerly await pay day. For those living under tight financial conditions, losing a portion of a paycheck means that meeting basic expenses for rent and groceries might be impossible. Many people, unfortunately, can face wage garnishment from creditors if they fall behind on bills, which can put them in an even tighter financial bind.
Wage garnishment occurs when a creditor seeks and receives a court order to withhold a portion of a person's wages. If the legal order is granted, employers must follow along.
For employees who see their hard-earned pay being siphoned by creditors, it might be helpful to understand the limits of these orders. According to the U.S. Department of Labor, the Consumer Credit Protection Act puts a cap on the amount of money creditors can garnish from each pay period.
It may also be helpful to know that certain types of debt are subject to higher garnishment limits. Tax debts and back child support, for example, are subject to a higher limit on garnishment than private debts.
Even with these limits, as imposed by federal law, wage garnishment can prove to be an immense burden. People in this situation might wonder exactly what they can do to put an end to wage garnishment and put their debts in the past.
Although there are numerous ways to seek debt relief, it's worth noting that declaring personal bankruptcy will put an immediate hold on collection actions and wage garnishment. At this point, people can take a moment to breathe and figure out how to work toward a clean financial slate.
Source: United States Department of Labor, "Wages and Hours Worked: Wage Garnishment," accessed March 11, 2014