Wage garnishment is a recourse that creditors take when you do not make regular payments on your debts. And while it can feel unfair and put undue pressure on your financial situation, as long as they get approval from the courts, these liens can pull a portion of your paychecks until you pay off your debt or the court-set duration runs its course.
Most creditors go through an application process over collections. After a successful lawsuit, they become a judgement creditor and are lawfully allowed to garnish your wages, though some situations like unpaid income tax and defaulted school loans do not need this formality.
The numbers of wage garnishment
A Tennessee law opinion from the attorney general discusses the nuances of wage garnishing. Notably, anyone with a lien on your paycheck cannot ask for more than 25% of your disposable earnings. In fact, that 25% is the total cap that all liens can draw from you. This means that if one judgment creditor is garnishing your wages by 10%, another could only garnish 15%. This is cold comfort when you need to afford your rent, food and other necessities with 75% of your earnings.
Avoiding wage garnishment with bankruptcy
While bankruptcy may feel like a demoralizing topic, it is in fact a great tool of debt management. Whether you use Chapter 7 or Chapter 13, one of the greatest advantages of bankruptcy is the stay it can put on wage garnishments. The automatic stay orders all creditors applicable to stop their collection actions. If bankruptcy is not an option, there are plenty of other ways to enact one of these stays outside of them.