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You aren't always powerless when it comes to a wage garnishment

Few people here in Tennessee, or anywhere for that matter, would argue with the fact that having even more money taken out of your paycheck because you can't meet your financial obligations doesn't help the situation. When you received notice of the wage garnishment, you probably felt as though you could do nothing to stop it.

Now, you don't bring home as much as you used to, and it's even harder to pay your essential bills such as rent, utilities, groceries and gas. Is there anything you can do?

Legal limits on the amount of garnishments

Most wage garnishments result from past due balances for consumer debt, child support and alimony, student loans, and taxes. Fortunately, the law limits how much of your disposable income (what's left over after taxes and benefits) a creditor can take from you as follows:

  • For child support and alimony, up to 60% of could go toward the balance owed unless you currently support another child and/or spouse in which case the maximum drops to 50%. Depending on how far behind you are, another 5% could come out as well.
  • Federal student loans are capped at 15% of your income.
  • For consumer debts such as credit cards, personal loans and medical bills, creditors can only take either 25% of your income or 30 times the amount you earn per week over the federal minimum wage.
  • Your student loan holder can take 15% of your income.
  • Even though the IRS will look at the number of dependents you have and your standard deductions, the agency will usually on take up to 15% of your income.

You may be among the people who cannot financially handle even a 15% reduction in your income practically overnight, much less anything more.

What can you do about it?

The standard practice for creditors is to send notice of the wage garnishment to your employer and you. Read the paperwork thoroughly and carefully as soon as you receive it. If for some reason you don't believe you owe the debt indicated in it, you could challenge it, and the sooner you do so, the better. If you do owe the debt, that does not necessarily mean you have to throw your hands up in the air and give up.

You could contact the creditor and attempt to work out a better arrangement. It may be possible to set up a payment plan that will better suit your financial situation. In the alternative, you could let the garnishment happen or arrange to pay the debt in a lump sum. If those options will not work, you could consider other debt relief options such as bankruptcy.

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