A wage deduction is a legal request from a creditor to take money directly from your paycheck before you are paid. If you owe taxes or fall behind on your federal student loans, the government can make such requests without a court order. All other creditors must get a decision in court before they can legally order that your salary be taken to pay off debts.
The good news is that you’ll usually get advance notice and depending on when your employer calls to order payroll, (known as the “payroll cut-off date”), you’ll have limited time to take action that might stop your paycheck from being taken. The amount of salary that can be taken also depends on who is garnishing. The IRS can take up to 50% of your wages to pay back taxes, so wage deductions will cost you financially if you don’t take action to stop them. The amount that can be taken by creditors ranges from 15% to 50%.
The easiest way to stop wage deductions from happening is to immediately make payment arrangements with creditors and start making payments. Unfortunately, this valuable information is only useful when you have the money to pay for it. If you don’t have the money to pay for it, then the next best alternative to stopping wage deductions is to apply for bankruptcy protection.
You see, filing a bankruptcy case gives rise to what is called Automatic Stay, which is a court order to stop all collections against people who apply for bankruptcy protection, including foreclosures and payroll deductions. This can be a powerful tool against aggressive debt collectors who have gone to great lengths to sue you, obtain an assessment and carry out their legal debt collection efforts by seeking out your employer and asking to be paid out of your salary.
Depending on your income and financial status, you may file under Chapter 7 of the Bankruptcy Code for liquidation bankruptcy wherein you terminate the withholding without making a single payment on the debt. Otherwise, if your income is above average for the size of your household (using the IRS median household income standard), or, if you have assets to protect such as home equity, then you can apply for a payment plan under Chapter 13. Code of Ethics.
Whichever direction you choose, you must act quickly or the decoration will advance. It is important to consult an attorney to explore all your options for getting out of debt and it is worth exploring bankruptcy cases as this is a powerful tool that puts you back in control of your paycheck and gives you some breathing room to bounce back. financial. Get rid of debt and move quickly towards your financial goals. Most lawyers provide free consultations, so take their advice even if you don’t hire them. We have helped hundreds of families avoid pay cuts. Let us know if we can help you too.
