Considering the current global situation, there is no surprise that many people are in debt today. There are also the issues of paying off these debts while still being in the same situation which caused them in the first place. In this article, we will go over the meaning of the term wage garnishment, how it happens, and how you can deal with it – seeing how these uncertain times do not call for debt enforcement.
What is Wage Garnishment?
To inform you about the ways you can stop wage garnishment, we must first define what it is precisely. Wage garnishment and income execution are two interchangeable terms, applying to the situation where the government or court orders your employer to take away a certain amount of money from your gross earnings for the benefit of your judgment creditor. What happens after that is – your employer will automatically take out the money from your gross pay, the same way taxes and social security payments are made. And your salary will continue to be garnished until you either pay off your debt or resolve it in another way.
However, for that to happen, the judgment creditor would first need to file an Income Execution Form and get it signed by the county clerk or the City Marshal. There are some additional rules – the judgment creditor can’t take your whole paycheck due to legal limits which decide how much of your salary a creditor can garnish. Moreover, the portion of your salary that will be taken away also depends on the type of debt you have.
Wage Garnishment Happens in Two Stages:
First – garnishment takes place with an enforcement officer sending a notice to the debtor. The notice states that garnishment will be sent to the employer after 20 days if they don’t make the payment. To avoid the garnishment being sent to the employer, the debtor can pay the 10% of gross income directly to the enforcement officer until the debt is paid in full.
However, if the debtor does not respond to the enforcement officer within 20 days, the Marshall or sheriff will notify the bank that payment wasn’t made. Then the garnishment papers will be sent to the employer, and the employer will be the one to hold the employee’s earnings, which, most often, comes in the form of payroll deduction. On top of the amount owed, there is an interest rate of 9% plus additional fees for the enforcement officer.
Most Common Types of Debt That Can Lead to Wage Garnishment
The New York state can use wage garnishment as a way to collect your unpaid taxes. The New York state will then continue to take away from your gross wage until your whole debt is paid. In case you can’t continue paying and you file for bankruptcy, the New York state will stop the garnishment as you go through the process.
Taxes that need to be paid in this state per tax year include, but are not limited to, federal tax, federal income tax, state income tax, social security tax/FICA tax, and Medicare tax.
However, it is good to keep in mind that the taxes and tax rate you need to pay depend on your tax bracket. Moreover, there are other ways to reduce your tax bill, such as choosing between standard deduction or itemized deduction while filing your taxes.
In case you have not been taking care that you paid state taxes correctly in the past, your tax liability might also be a reason for a wage garnishment.
If you owe money for child support, the New York state can use wage garnishments as a way for you to pay back the debt. Ever since 1988, all court orders regarding child support involve the automatic paycheck withholding order. Therefore, It can order your employer to go through your taxable income.
Support payments tend to be garnished at a much higher level than other ones. The federal law will limit your wage garnishment up to 50% out of your disposable earnings. However, if you are currently supporting a spouse or a child, up to 60% of your wages can be taken – and an additional 5% for support payments, lasting over 12 weeks until the debt is paid. If you are in debt for child support to somebody outside of New York, the laws applying to your case might be those of that state.
If you have defaulted on your student loans, the New York state will be allowed to garnish up to 15% of your disposable income. In the case of being defaulted on your loans – the U.S. Department of Education, or any other law firm for this type of debt collecting, will be able to garnish your wages without first getting the court judgment by using the administrative wage garnishment. When determining the maximum garnishment amount, the agencies collecting your debt will need to follow the law in place for credit card debts, medical bills, and other personal debts since the loans are considered private debt.
How You Should Deal With Wage Garnishment
There are several steps to getting a wage garnishment and several ways it can cause trouble in your daily life. We will first go through the procedures concerning the garnishment and then address some of the issues that might appear along the way.
Receiving the Notice
If you receive the wage garnishment notice, you need to check up on your current situation to know if you’re able to cancel or vacate the judgment. If you’re able to vacate the judgment, the judgment creditor will no longer be allowed to garnish your wages. The judgment will also not appear on your credit report later on.
In order for you to vacate the judgment and be relieved from wage garnishment, you will need to file court papers and appear in court at least once.
Receiving a Default Judgment
If the defendant fails to appear in court (“defaults”), the court will then need to issue a judgment against the defendant. This type of judgment is called “default judgment.” In some circumstances, it is entirely possible to reopen and vacate a default judgment. There is a specific procedure the court goes through to determine whether you will be allowed to vacate your default judgment or not. This procedure is relatively simple, and most defendants can navigate through it successfully.
First, you’ll need to find out which court issued the judgment. Then, you should visit that court and file an ‘Order to Show Cause’ provided by the civil court clerk. On the form, you’ll need to explain the reason why the court should vacate the judgment. You’ll need to establish either an excusable default or lack of jurisdiction, or possibly both. On the form, you should always include the reason you didn’t appear in court, as well as a good defense. After you fill out the Order to Show Cause form, it goes to a judge for signature. The court will instruct you on how to hand in your papers and give you a date for when to come back to court.
In some courts, you might need to wait up to three weeks for a return date, but in most cases, the return date should be within eight days of your Order to Show Cause. If the judge does not sign the Order to Show Cause, then the judgment stays in place.
Once the default judgment is vacated, the plaintiff must release your bank account and cancel the wage garnishment. This is included in the court’s order vacating the judgment. In most cases, even though the judgment is vacated, you still have to defend the case. That means you have to file an answer and attend at least one additional court date.
In case you are not entirely sure what to do, Cilenti & Cooper might be able to help you. As New York’s leading wage and hour firm with over 11 years of experience in the field of worker protection, they are the best choice if you want to look for professional help. This is even more true when your job has been terminated due to wage garnishment and you are not entirely sure whom to ask for help – as state laws provide a certain amount of protection you might not be aware of.