Rescuing Your Paycheck from the Threat of Garnishment

If you fall behind on your bills and other financial obligations, you may already know that your creditors have the option of garnishing your wages. However, you may be unfamiliar with the rules surrounding the process. Since wage garnishment is, at the very least, an unpleasant thing to experience, it is important to know your rights and what you can do about it if it happens to you.

Tennessee garnishment rules

In Tennessee, garnishment is not something that can happen without you knowing about it first in most cases. Before garnishment is even an option, your creditors must first sue you in court, win the lawsuit and ask the court to allow garnishment of your wages. Due to the notice requirements of lawsuits, you have ample notice if your wages are to be garnished in the future.

Although you must first be sued in court in most cases, there is an important exception. If you have delinquent child support, student loans, or taxes, your wages may be garnished without the need of a lawsuit.

If the court issues an order allowing the garnishment of your wages, Tennessee law limits how much your creditors may deduct from your paycheck. Specifically, the law limits the maximum amount to the greater of:

• 25 percent of your weekly disposable earnings-what is left over after your employer has deducted taxes, Social Security and other necessary deductions; or

• The amount that your paycheck exceeds 30 times the federal minimum wage.

If more than one creditor is seeking garnishment of your wages, the law limits the amount that may be taken by your creditors to 25 percent of your disposable income. Additionally, if you have children that are dependents, you may keep an extra $2.50 per child per week for their support.

Fighting back against garnishment

Since garnishment is a process that involves your employer, which can lead to embarrassment or the loss of your job in certain cases, most people seek to avoid the process altogether. One way of doing this is to work out a payment plan directly with your creditor. Although this sometimes works, it is important to understand that your creditor is not legally required to accept any repayment terms you offer, regardless of whether they are reasonable.

In cases where you cannot afford to repay the debt or the creditor refuses to work with you, filing bankruptcy is generally the best solution. As soon as you file bankruptcy, the automatic stay immediately puts an end to all garnishment attempts. As you work your way through the bankruptcy process, most of your debts are eliminated, including those subject to garnishment. Once your bankruptcy is over, you are free of most of your pre-bankruptcy debts and can start over anew.

If you are facing garnishment, bankruptcy may or may not be the best move. An experienced bankruptcy attorney can examine your financial state and suggest the best way out of your sticky financial situation.