Creditors Taking Money Out Of Your Paycheck

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. On the other hand, if the court rules against you and the creditor triumphs, the court can then mandate that your employer set aside a certain percentage of your paycheck every week and give it to the creditor. This process is referred to as wage garnishment or wage attachment and continues until the court ordered debt amount is paid.

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 limit further the amount that can be deducted from the debtors paycheck. What this means in practical terms is that a creditor bringing a suit against a creditor in Minnesota can expect different results than a creditor filing a lawsuit in Alabama.

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. But, the federal law explicitly prevents an employer from firing you due to a wage garnishment. If an employer does fire you, however, you will have a legitimate criminal lawsuit to bring against your employer.

Now, to be sure, the fact that their wages are being garnished can be 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://www.moneyarticlelibrary.com

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