Wage Garnishment? Get it stopped today!

A wage garnishment or wage levy is a legal seizure of property. It is an effective method of tax collection used by both the IRS and many States. The IRS or States will issue a wage garnishment to seize all or part of a taxpayer’s wages if a taxpayer does not respond to collection letters or fails to live up to an agreement to re-pay back taxes. A wage garnishment does not take the taxpayer’s financial situation into account and is often thought of by collection agents more as an “attention getter” than a true resolution to a tax problem.

If a taxpayer wishes to avoid having their wages garnished, it is best to begin working with the IRS or State tax agency before the levy actually goes into affect. A levy will never be issued if there is already an agreement in place to pay back the past due tax debt and the taxpayer is fulfilling their end of the agreement.

Once a wage garnishment has been issued it will remain in affect until the debt is paid in full, the term of the garnishment expires or it is released for some other reason. IRS garnishments do not have a set term, but some states do issue levies with set terms. A garnishment in Utah, for instance, has a term of 90 days. After the 90 days is up, the garnishment stops and another one must be issued in order for them to continue collecting on the debt. Getting a levy released for any other reason besides the first two usually will require either making other arrangements to pay back the debt, proving that the levy is creating a severe hardship or proving that the tax debt is not valid or owed.

With the IRS, wage levies are a common collection method. Before a levy is issued, the IRS will send multiple letters to your address of record in an attempt to contact you and resolve the debt. The last letter a taxpayer will receive before a wage garnishment can be issued is titled “FINAL NOTICE OF INTENT TO LEVY.” If a taxpayer or his representative does not contact the IRS within 30 days of the date of this letter a garnishment can now be issued. If a case is in automated collections (ACS) it is also common for a bank levy to be issued simultaneously with the wage levy.

Most states also use wage garnishments as a method of collecting past due taxes. Each state has its own rules regulating wage garnishments which very widely from state to state. The process in most states is similar to that of the IRS. The state will first attempt multiple times to contact the taxpayer and urge them to call in and set up some type of payment agreement. If the taxpayer does not respond or does not keep up on any agreed payments, only then will the state issue a levy.

Some states, like New York, will first send the levy to the taxpayer. A New York wage levy is called an Income Execution. The Income Execution orders the taxpayer to send 10% of their gross wages to the State in payment of their past due taxes. If the taxpayer does not begin sending payments voluntarily at that point, New York will only then, send the Income Execution order to the Employer to withhold money from the taxpayer’s wages. New York is an exception to the usual process. Most states go directly to the employer.

People who want to know how to stop wage garnishment have not paid certain debts. In such a situation, a creditor can demand that the debtor’s employer subtracts part of the debtor’s wages for forwarding to the creditor. Obviously, this can be a very embarrassing and inconvenient situation. A debtor should be familiar with his or her rights on the issue if it does happen.

In wage garnishment, a creditor sues the debtor and obtains a court judgment. This judgment states that the debtor’s employer pays the creditor a maximum of 25% of the debtor’s paycheck. This amount is then forwarded to the creditor via a court-appointed officer. Many debtors in such a situation fear that their employer will fire them in case of wages garnishment. However, the law does not allow employer to take any negative action against an employer because of one wage garnishment. The situation changes when there are more than one wage garnishments, and there is no legal protection for an employee in such a situation. There is often not much one can do to stop an employer from forming a negative opinion of an employer subjected to wage garnishment, either. It is quite possible that wage garnishment can compromise promotions and raises later on.

Wage garnishment is the usual route for creditors to collect money when debts become extremely delinquent. One can avoid wages garnishment by steering clear of such situations that will lead to it. Hiding from and avoiding creditors by ignoring correspondence and phone calls is definitely not a feasible option. The best route is to contact one’s creditors and let them know why repayment of debt is not currently possible. Afterwards, one can offer a reduced monthly payment and keep such creditors updated about one’s financial progress. In such a way, one can avoid writs of wage garnishment and spare oneself a lot of worry and sleepless nights.

It is in the best interests of creditors to avoid spending fortunes on collection costs. They are therefore invariably open to avoiding lawsuits. Many are open to alternate repayment plans or negotiated settlements.

A person threatened with wage garnishment should come to an agreement with the other party very quickly. If this is just not possible, probably the only option is to file for bankruptcy as soon as possible. This would put a legal stop to any creditor action towards wage garnishment and can help avoid judgments.

One should remember that it is very hard to undo a writ of wage garnishment once it is awarded. However, it is not impossible, especially if the wage garnishment is compromising the debtor’s ability to live decently. In a case where wage garnishment leads to the debtor’s inability to afford basic living necessities, the debtor can file a ‘Claim of Exemption’ form with the writ-issuing court. Such forms are available at all regular courthouses. On the day of court hearing, the debtor needs to bring along documented proof of income and monthly living expenses. These expenses should include mortgage or rent payments, utilities, groceries and so on. In this way, one can probably convince the judge to nullify the writ of garnishment.