There are few things more frightening than being slapped with a debt collection lawsuit. If collectors are successful with their suit, they’ll end up garnishing your paycheck. Any creditor can try to garnish your paycheck.
That means your employer gets a court judgment, which can threaten your job. Even if you keep your job it’s hard to live on just a portion of your income, especially if you’re already dealing with financial problems.
Limits on Wage Garnishment
If you earn less than 250% of the federal poverty income level, New Jersey law limits creditors to taking 10% of your income.
That’s still a lot of money for most people.
It also doesn’t apply to federal taxes or child support.
How the Garnishment Process Starts
You will be served with a lawsuit by a creditor. This generally won’t happen till you owe more than $1000, but a creditor can sue you for any amount.
If you receive a lawsuit it is absolutely vital that you address it. Call an attorney right away, because ignoring it won’t make it go away. If you don’t show up, the judge will just enter a “default judgment” against you.
You’ll then get a Notice of Application for Wage Execution, a document which tells you the creditor intends to use the court order to garnish your wages. You’ll get a Certification of Service which proves you got the notice, and a Certification in Support of Application for Wage Execution which lists the amount you owe, your employer, and the amount to be garnished. You have just 13 days to object to the garnishment, which is difficult to do if you ignored the court case.
There are three ways to stop garnishment.
One way is to fight the lawsuit in court. This might be a valid option if you don’t actually owe the debt, if the statute of limitations has passed on the debt, or if there is some other problem with the creditor’s lawsuit.
This happens more often than you might think: mistaken identity is a common feature of so-called “zombie debts.”
If the creditor already has a judgment you can file a Certification in Objection to Wage Garnishment detailing why you’re objecting and why you’re asking the court to reduce or eliminate the garnishment. You might need to file supporting evidence to back up your objection. These rarely work, but you can try.
If you know you owe the debt, bankruptcy is usually the best choice. The automatic stay will put a stop to the lawsuit, and will make garnishment impossible.
By the time you are facing wage garnishment bankruptcy is usually the best option. It’s rare for any borrower to be fighting these sorts of battles with just one creditor. Usually we see clients who are struggling to hold on to their house or car as well, and who are getting calls from collectors on a regular basis.
Not sure what to do? Reach out for a free consultation. Our team is here to help you understand your options and we are happy to help you fight your wage garnishment.