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Can Wages Be Garnished For Credit Card Debt

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Debt Collectors Cannot Threaten To Garnish Wages For Credit Card Debt

When Can They Garnish My Wages? Understanding Secured v. Unsecured Debts

Here in Pennsylvania, debt collectors cannot threaten to garnish your wages for credit card debt. Two laws prevent them from doing this: a federal law called the Fair Debt Collection Practices Act and a Pennsylvania state law called the Fair Credit Extension Uniformity Act .

These laws prohibit creditors/debt collectors from making deceptive, false, or misleading statements. Since credit card debt cannot be collected through wage garnishment in Pennsylvania, threatening to do so qualifies as a false/deceptive/misleading statement. Any debt collector that makes such a threat is violating state and federal law.

What Can I Expect If My Bank Account Is Garnished

Within two days of receiving the Garnishment Summons, the bank should send you a garnishment notice, instructions and two copies of an âExemption Form.â You will not receive notice of the garnishment until after your funds are frozen. You will not have access to your funds while they are frozen. This may mean that your checks may bounce, and you may incur overdraft charges during this time.

Serving A Garnishing Order

When an order for wage garnishment in Canada has been obtained by your creditor, it must be served on your employer or on the party they are trying to seize funds from.

A garnishment is not limited just to your employer it can be served on your bank in an effort to seize money in a bank account. Regardless of the party, once they receive the garnishment order they are legally bound to follow it, unless the provincial legislation provides otherwise.

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After Garnishment Your Debt Can Still Grow

Worse still, your debt can continue to grow if the garnishment doesnt cover the interest payments. Even your garnishment order chips away at the principal due, it might take years to get out of debt and the amount you pay will be far more than what you originally borrowed.

If you served with a debt-collection lawsuit, do the following:

  • Settle the debt if you can. Your creditor may prefer forgiving a portion of your debt and saving on legal fees. If you dont have cash to put up for a settlement, consider selling an asset.
  • Review your states laws. Laws set limits on how large garnishments can be, and they allow for exemptions. Become familiar with the exemptions and, if you end up defending yourself against a suit, file for any exemptions that might apply to you.
  • File for bankruptcy protection. Bankruptcy can inflict enormous damage to your future ability to borrow, but sometimes its the only way out of debts that cant be repaid. Before filing bankruptcy, review your situation with a credit counselor and an attorney.

Arnold, C. and Kiel, P. Million of Americans Wages Seized Over Credit Card and Medical Debt. Retrieved from:

Michon, K. Can Credit Card Companies Garnish My Wages? Retrieved from:

State Law Protecting Wages And Other Funds Deposited In A Consumer Bank Account

Can a Debt Collector Come After Me if My Wages Are Already ...

Unless funds are exempt, judgment creditors can seize funds from a consumers bank account to pay a judgment against the consumer. While federal and state laws protect wages before they are distributed to the consumer, the wages and other funds may be subject to seizure once deposited in the consumers bank account, absent state law to the contrary. Depending on the state exemption, even exempt funds in a bank account may be frozen.

For a detailed description of applicable law protecting wages and benefits deposited in a bank account, see NCLCs Collection Actions § 14.5. See alsoNo Fresh Start 2020: Will States Let Debt Collectors Push Families into Poverty in the Wake of a Pandemic . This article provides a summary of state exemptions that protect bank accounts from judgment creditors. Additional or different exemptions may apply in a bankruptcy proceeding.

A key distinction is whether an exemption for funds in the consumers bank account is self-executing or whether the consumer must take affirmative action to assert the exemption. If an exemption is self-executing, the bank should protect the funds without the consumer having to claim an exemption, so there will not be a period of time when those funds are frozen.

Twelve states follow a third approach to exempt a certain dollar amount in the consumers bank account no matter their source :

Whether such an exemption is self-executing or not will depend on state law and practice.

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Suing Debt Collectors For False Statements

Both the FDCPA and the FCEUA allow Pennsylvanians to sue debt collectors who make false or misleading statements. This is a huge boon for Pennsylvania residents, as debt collectors frequently make false/misleading statements. Consumers who have been harassed by debt collectors can seek several types of damages:

  • Actual Damages
  • Statutory Damages
  • Attorneys Fees

Actual damages compensate you for monetary loss and harm. By harm we mean emotional distress, stress, anxiety. Debt collectors harassment can be extremely stressful and distressing. Statutory damages are damages that you are entitled to receive when a debt collector violates a law.

Pennsylvania residents may receive statutory damages of up to $1,000. When debt collectors violate the law, Pennsylvania residents may even be entitled to compensation for cour costs and legal fees stemming from the case. This gives Pennsylvania residents the power to fight harassment from debt collectors.

How/why Are My Wages Being Garnished

Once a judgment is granted by the court, the creditor has a few options to enforce the judgment and collect the money. One way is the garnishment of your wages .

If you owe child support, back taxes, or student loans, your creditors can sometimes garnish your wages without a court order.

can also garnish your wages for debts owed, but they must have a court order first. When a wage garnishment is in place, your employer holds back some of your wages and gives the money directly to the creditor through the Sheriff or Marshall.

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What Are My Options If My Wages Are Garnished

by A Licensed Insolvency Trustee

Its payday, and you notice that your paycheque is significantly smaller than usual. You speak to the person in charge of payroll at your firm and find out that your employer has received a garnishment notice from the court with respect to your wages. You are upset, confused and not sure what to do next!

Note: some resources use the verb garnish, and some use garnishee. They are both correct, and they mean the same thing to seize money owed to the debtor by someone else , for the benefit of a creditor. In legal documents, garnishee may also mean the person from whom the garnished monies are taken.

If your employer has received a garnishment order, that means your creditor has gone to court and obtained a judgment against you for a specified amount of money. Garnisheed monies are paid directly to the court, and eventually make their way to the creditor.

Some Funds Exempt From Garnishment

“Can a debt collector garnish my wages without a judgment?”

When an employer is notified of a judgment requesting wage garnishment, only a certain percentage of wages can be withheld according to the total of disposable earnings of the employee allowing the employee some income to live on, according to Title III of Consumer Credit Protection Act.

Also protected from garnishment are deductions that are legally required to be paid by the employee, such as federal, state and local taxes, unemployment insurance, state employee retirement system payments and Social Security payments. However, deductions not required by law are not protected from garnishment.

Unfortunately, many consumers bury their heads in the sand when the notices start coming in. They are usually overwhelmed with creditors, and by ignoring the situation, the lawsuit goes through and the consumer is faced with garnishment and minimal alternatives.

According to the U.S. Department of Labor, Title III also protects employees by limiting the amount of earnings that may be garnished in any workweek or pay period to the lesser of 25 percent of disposable earnings or the amount by which disposable earnings are greater than 30 times the federal minimum hourly wage prescribed by Section 6 of the Fair Labor Standards Act of 1938. This limit applies regardless of how many garnishment orders an employer receives.

See related: Do I have to pay fees and interest includeed in a wage garnishment?

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Federal And State Law Limits The Amount That Can Be Taken From Your Paycheck To Pay Debts

Updated By Cara O’Neill, Attorney

Judgment creditorsthose who’ve filed a lawsuit against you and wonand creditors with a statutory right to collect back taxes, child support, and student loans can garnish or “take” money directly out of your paycheck. But they can’t take it all. Federal and state law limits the amount a creditor can garnish.

To learn how wage garnishments work, see Wage Garnishments: An Overview.

A Collection Tool Of Last Resort

Garnishment is a legal remedy authorized by a court and should be considered a collection tool of last resort, says David Cherner, the former legal and legislative director of state government affairs for ACA International, the Association of Credit and Collection Professionals. In most states, the garnishment process can only be initiated by a court order and only if a judgment for monies owed has been entered.

Our counselors often hear from people who are very ashamed when they realize that their employer is now familiar with the details of their financial situation because of a wage garnishment, says Bruce McClary, vice president of communications at the National Foundation for Credit Counseling .

Employers are typically required to tell workers about the withheld amount. While it is against the law for an employer to fire an employee whose wages are garnished, that protection goes away after a second and third such judgment, according to the Consumer Credit Protection Act.

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Can Credit Card Companies Garnish My Wages

Reading time: 4 minutes

The short answer is yes but with a large caveat. Creditors may only siphon off part of your paycheck if they have sued you and won. It takes a long time to reach this point, but that doesnt necessarily mean its a rare occurrence. The best way to avoid a lawsuit is to keep up with your monthly payments. However, if youre already struggling with debt and fear your creditors may take legal action against you, there are ways to help prevent wage garnishment.

Four Practice Tips Concerning Wage Garnishment

Can social security be garnished for credit card debt?

Tip #1: Because the amount of wages protected by state law often changes, make sure the creditor and employer are complying with current law. Seizing an unlawful amount may subject creditors or employers to remedies under federal or state law. SeeNCLCs Collection Actions § 14.2.7.

Tip #2: Watch out for multiple creditors garnishing the same wages. Because the maximum legal amount of wages that can be garnished applies to the total of all creditors and not just each creditor, make sure a second wage garnishment from the same paycheck does not exceed the allowed maximum, including the amount taken in the first garnishment. Student loan and child support garnishments all count toward this maximum.

Tip #3: Consumers should adequately withhold taxes. If insufficient taxes are withheld, not only is there a tax liability at the end of the year, but an additional amount can be garnished from the consumers paycheck.

Tip #4: Take advantage of the rule that wage garnishment limits apply to the cumulative amount of all garnishments sought by multiple creditors in a given pay period. Where a consumer is obligated to pay child support, if that obligation is paid through a payroll deduction rather than voluntarily, the consumer is better protected from another judgment creditors garnishment. SeeNCLCs Collection Actions § 14.2.1.5.5.

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When Are Your Wages Exempt From Garnishment

The wages of people who receive certain types of government assistance are exempt from garnishment if the person fills out an exemption form. The Notice of Intent to Garnish Earnings should contain a list of categories that make your wages exempt from garnishment. In general, if you have received government assistance based on need within the past six months, then creditors cannot garnish your wages for two months after the date you last received the assistance. Assistance based on need includes assistance from government programs such as:

  • Minnesota Family Investment Program
  • Energy Assistance and
  • Emergency Assistance.

An exemption does not apply automatically rather, to qualify for an exemption, you must complete the appropriate paperwork.

The Maximum Amount That Can Be Garnished

If you are employed, the amount of money that can be garnished has limits, and these limits also vary from province to province.

In some provinces the rules are very simple, like British Columbia, which allows a creditor to garnish a maximum of 30% of your take home wage.

In Saskatchewan, the legislation only requires that the debtor be left with $1,500.00 per month, plus $300.00 per month for every dependent in their care. Employment income above these amounts can be garnisheed in its entirety.

For other provinces the rules are dramatically more complicated. In Alberta, for instance, you keep the first $800 of your monthly net income, then creditors can garnish 50% of your monthly net income between $800 and $2400, and 100% of any net income above $2400. Then these exemption limits are increased by $200 for each dependent you support.

A word of caution: These provincial limits do not apply to everyone.

For example, across Canada, if you owe Canada Revenue Agency money they are not subject to these provincial limits. As well, in many provinces these limits dont apply to those who are self-employed, or owe child support / alimony under a court order.

If you are being threatened with a garnishee, it is important to talk to a Licensed Insolvency Trustee to determine what is at risk.

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Wage Garnishment: How It Works And What You Can Do

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Wage garnishment happens when a court orders that your employer withhold a specific portion of your paycheck and send it directly to the creditor or person to whom you owe money, until your debt is resolved.

Child support, consumer debts and student loans are common sources of wage garnishment. Your earnings will be garnished until the debt is paid off or otherwise resolved.

You have legal rights, including caps on how much can be taken at once. And you can take steps to lessen the effect and help you bounce back.

Can Credit Card Companies Garnish Social Security Wages

Can Debt Collectors Garnish Social Security?

Private debt collectors, such as credit card companies and banks, cant garnish your Social Security benefits. Section 207 of the Social Security Act prohibits debt collectors or a bankruptcy court from dipping into your bank account to take Social Security money for purposes of paying off what you owe.

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When Your Social Security Funds Arent Safe

These rules protect most of your Social Security income, but not all of it. If you have anything more than two months worth of benefits in your account, then that money could be seized.

Example: You receive $500 a month in benefits, but you have $2,000 in your account. A creditor can garnish $1,000 of your account in order to pay back your debts.

There is another caveat when it comes to Social Security benefits garnishment. It must be the only money that you deposit into that specific account. If you deposit any other funds into the account, banks arent legally responsible to know which funds can be garnished. The same rule applies if your Social Security check isnt automatically deposited or put on a prepaid card. If you receive a paper check for Social Security and deposit it into your account, then all that money is susceptible to garnishment.

How To Challenge Wage Garnishment

Receiving a reduced income due to wage garnishment comes with several challenges. These include hardships in running your daily routines. Several options are at your disposal as far as handling the wage garnishment is concerned. Such options include:

  • Debt elimination through bankruptcy
  • Garnishment reduction through filing a claim of exemption in the court of law

When you are declared bankrupt, you receive protection from creditors. This declaration means that debt collectors can no longer pursue you for what you owe them. Neither can your creditors sue you in court, nor your wages garnished.

However, this does not mean that the state will cancel all your debts. They still exist until you successfully finish your bankruptcy. Once this happens, each one of your creditors will receive their share of assets and pledge to forgive the remainder should any exist.

The debts eliminated by bankruptcy include:

  • Bank loans
  • Retail store cards and accounts
  • Installment loans
  • Certain student loans
  • Loans from individuals

A claim of exemption is a form that a debtor files with the levying officer to protect a particular property or a certain amount of funds from the creditor. In this form, the debtor explains why the creditor should not take this property or funds based on the laws and rules about the exempted property types.

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