How Wage Garnishments Work


If you have a credit card account that goes into default, the creditor may decide to sell it to a Collection Agency.  If the Collection Agency spends a lot of time trying to collect, and they’re unsuccessful, they may decide to turn it into a Judgment. This is usually accomplished by filing a lawsuit in Small Claims Court or Superior Court.  Ouch.

A Wage Garnishment is a pretty straightforward process: Your employer deducts the 25% from your paycheck and sends it to the creditor. Most wage garnishments are the result of unpaid taxes or back owed child support, but it’s not unusual for credit card debt to be converted to a Judgment through the legal process.

Make no mistake – the Creditor wants to recover their losses. If the credit card caompany or debt collection company is unsuccessful in recovering the debt,  they’ll try and turn it into a Judgment. If the ruling goes in their favor, and against you, a Judgment may be issued. This then gives the creditor the legal authority to garnish your wages, levy on your bank accounts, and even put an abstract on any property that you own – or may own in the future.

Once the judgment against you is rendered (you usually have 30 days to file an appeal), there’s not much you can do.  You could ask them to lower the garnishment amount because, by law, they can take 25% of your disposable wages. You could try and argue that the amount being deducted from your paycheck is causing severe hardship. If State and Federal  garnishment laws conflict, the garnishment has to be adjusted to the lower amount.

Another problem you’re going to have with the Judgment against you is that if you own property, the creditor can file a abstract in that County which essentially puts a lien on any and all property you own in that County. Even worse, if you do not currently own property, the abstract/lien will attach to any FUTURE property that you may own. You won’t be able to sell or re-finance until the Judgment is paid off. Actually, upon sale of the property, the Judgment Creditor gets paid off first.  There goes your equity.


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