What Is a Garnishment?
For borrowers who can’t pay back their loans, it’s possible that a creditor might be granted a garnishment against you. What’s a garnishment, and how can you avoid its effects on your wallet?
So What Is a Garnishment?
A garnishment, typically referring to wage garnishment, is a type of financial tool that can be used by your creditors when collecting a debt.
For the average debt collector, garnishment is awarded to them after winning a lawsuit against you in court. This tool allows them to collect money from you without your permission. They can collect by garnishing your wages, which means they’ll be able to take a portion of your income before you ever receive it.
They could also potentially take money directly out of your bank account. It’s also possible to have your property seized from you and later sold by the debt collectors to recoup the debt. And while the majority of garnishments start with a court case, it’s also possible for certain agencies to garnish your wages without taking you to court.
Which Agencies Can Engage in Garnishment Without a Court’s Permission?
In almost every state, if you’re late on taxes it’s possible for the IRS, or the state equivalent, to garnish your wages or bank account solely with a notice. Other government lenders are also often given this power, such as in the case of Department of Education loans.
Another agency that could potentially garnish your savings is the bank that you actually hold an account with. If you’re overdue on debt with your bank, they often have the right to directly garnish your account through a process known as the “Right of Offset”.
If you have a bank account, it’s likely you agreed to this when you signed the contract. This gives them the right to pay off your overdue debts automatically by taking it from your account. Luckily, there are a few ways that you can avoid this type of garnishment. Like getting help at Freedom Debt Relief to make the process easier.
How Do I Avoid Garnishment?
One of the first and best steps you should take to avoid garnishment is paying off your debts. In the case that this isn’t possible, you still have a few options. Firstly, unless you’re dealing with a government-backed loan, your creditor is going to need to sue you first.
This becomes likelier the more you owe to your creditor. Although still possible, creditors are unlikely to go after small debts of under a thousand dollars, as it would generally cost them more to collect than just writing it off as a loss. If you do end up getting sued, it’s always important to respond promptly to any notice you receive.
If you don’t, your failure to respond can be seen as an admission of guilt, and will likely end in a prompt verdict against you. It’s then possible for them to be granted a garnishment against you, which makes it almost impossible for you to negotiate for a lower rate.
If you’re looking to avoid garnishment from a bank, you should close any account with the bank that’s loaning you money and transfer it to a different one. This way, if they want to garnish your account, they’ll have to sue you first and win a judgment against you.
What If My Wages Are Already Being Garnished?
If you’re already getting your wages garnished, it can be difficult to stop it. But there are a few routes you should try. Firstly, trying to negotiate a payment plan that you can adhere to might be a good idea.
This can give you the possibility to pay back what you owe on a more manageable timeline. You could also challenge it in court or send in a notice of exemption, if you’re exempt from garnishment, this may be your best option.
What Is a Garnishment?