Earnings garnishment is a legal process where a creditor takes a percentage of a defendant’s salary to settle a debt. The process varies by state and some types of income are exempt. Filing for bankruptcy or designating the court clerk as a trustee can prevent garnishment. Another way to pay off debts is through “wiretapping,” where the IRS withholds tax refunds to satisfy obligations.
Earnings garnishment is a legal process by which a creditor takes a percentage of a defendant’s salary or earnings to settle a debt. It is a civil action used in common law countries, mainly in the United Kingdom and the United States. In the United States, the process is also sometimes called “wage garnishment” or “wage garnishment.”
The foreclosure process begins when the creditor serves the defendant with a notice of impending foreclosure. If you fail to respond to the foreclosure notice or are unable to reach a satisfactory repayment agreement with the creditor, the creditor may apply to the court for a garnishment order. If the court issues an earnings garnishment order, it is sent to the defendant’s employer. The order requires the employer to withhold a certain percentage of the defendant’s earnings.
The percentage of earnings that can be withheld varies from state to state in the United States. A handful of states in the United States do not allow wage garnishment. Under federal law, garnishment of earnings is limited to twenty-five percent of the defendant’s available earnings, commonly called “net pay.” In some states, the amount is set at ten percent of disposable income.
Certain types of income are exempt from garnishment. These include child support payments, workers’ compensation, unemployment benefits, and veterans’ benefits. Social Security payments and disability income are also exempt. These types of income are protected by federal law.
In many jurisdictions, a defendant can apply to a court to designate the court clerk as a trustee. The liquidator then distributes the payments to the creditors. Once a person does this, no creditor can attach his earnings. Consulting with a consumer credit counseling agency and entering into an agreement to pay certain amounts to each creditor can prevent a person’s earnings from being garnished. When creditors begin receiving payments under the agreement, they cannot attach the earnings of the person who signed the agreement.
A person cannot be fired from work because a garnishment order is sent to his employer. However, in some jurisdictions, more than one foreclosure of earnings orders in twelve months may result in loss of employment. In the United States, filing for bankruptcy in US federal court exempts a person’s earnings from seizure or repossession.
Another way of taking a person’s income to pay off debts is through “wiretapping”. In intercept, the Internal Revenue Service (IRS) withholds any tax refund amount owed to the debtor and then pays it to satisfy a federal, state, or court-ordered obligation. This is typically done for unpaid federal taxes, child support, and sometimes student loans guaranteed by the U.S. Department of Education. The IRS will also intercept federal tax refunds to satisfy unpaid state taxes if a state requires it. Wiretaps are done automatically under federal law, and no legal process from the IRS is required.
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