What Does it Mean to “Garnish Your Wages?”
A wage garnishment is a court order that forces your employer to send part of your income right to the creditor. So, if you were supposed to be paying a cash advance lender $100 a week and you stop, they will go to court and could ask for your employer to send as much as 50% of your gross monthly pay to them.
There is a strict legal process that must be followed in order for a creditor to garnish your wages:
- First, a creditor must obtain something called a judgment from the court; this is an official court acknowledgement that the creditor does have a claim against the debtor.
- Then, a seizure summons must be officially granted to the creditor. This provides the creditor with the ability to seize any assets.
- If there are no physical assets that a creditor can seize legally (like with an unsecured payday loan), then the creditor will give your employer a writ of seizure and start the process of garnishing your wages.
- A percentage of your income will now be given to your creditor directly until your debt has been paid off.
When Can Collection Agencies Collect Owed Money?
A creditor can garnish your wages when you stop making payments towards your debt. This means that they have reason to believe you will not pay towards your debt any longer and must ask for a court to force your employer to pay them on your behalf.
What Are the Repercussions of Wage Garnishment?
It can be embarassing to have your wages garnished. Since this process will involve your place of employment, it could hurt your reputation and your employers will know that you’ve been having difficulty paying off your debts. No one wants such personal information to be available at their place of work. Know that your employer is not legally allowed to demote you or fire you simply because your wages are being garnished. If you quit your job in an attempt to stop the garnishing, you will then face the issue of unemployment and not having any income to keep afloat. The garnishment is likely to pick-up when you get a new job, thus following you to every new place of employment.
How Can You Prevent Wage Garnishing?
Anyone can find themselves in a position where they may need to take out a personal loan. Emergencies happen to the best of us! However before taking out a payday loan, make sure that you have the capacity to make repayments on time and that you aren’t borrowing more than you truly need. If you plan well in advance and have a good understanding of the loan agreement, then you should be fully capable of repaying a personal loan. Remember, when it comes to payday loans, you should be using them only for emergencies that come up!