Just as debtors may resort to debt consolidation or bankruptcy, creditors can institute garnishment of a debtor’s wages or repossession of a debtor’s property. If you’re the debtor, of course, such actions are more than inconvenient; they can be a harsh punishment for your lack of repayment, altering your lifestyle and affecting your financial and emotional stability.
Wage garnishments are orders sent directly to your employer from the court or a government agency. The wage garnishment order requires that your employer withhold a certain amount of money from each of your paychecks and send this money directly to your creditor.
Fortunately for debtors, Georgia’s wage garnishment laws parallel federal laws by restricting the amount that creditors can take from your paychecks, Generally speaking, creditors with judgments can take up to 25 percent of the your disposable income (wages left after your employer has made the necessary legal deductions) or the amount by which your disposable earnings exceeds 30 percent of the federal minimum wage, whichever is less. If your disposable income is less than 30 percent of the minimum wage, it cannot be garnished at all. The limits for wage garnishment are in place to make sure that you retain enough money to live on while paying back your debt at a reasonable pace.
Although wage garnishment orders can be inconvenient for your employer, who may want to terminate you as a result, state and federal law often you some protection from job termination. In Georgia, your employer cannot fire you for wage garnishments relating to one source of debt. If more than one creditor obtains wage garnishments against you, however, the government offers no legal protection against termination.
Is a court order required to garnish your wages?
In most cases, in order to garnish your wages, your creditor has to first obtain a court order stating that you owe the creditor money. This rule holds for shopkeepers, credit card companies, service people or healthcare professionals. There are, however, creditors who need not obtain a court order to garnish your wages. No court order is necessary for wage garnishment to force you to pay the following:
- Child support
- Child support arrears
- Spousal support
- Unpaid income taxes
- Student loans in default
Since 1988, all court orders for child support have included an automatic income withholding order. In cases of child support, the percentage of wages garnished increases a great deal.
Up to 50 percent of your disposable earnings can be garnished for child or spousal support if you are supporting another spouse or child. If you are not supporting another spouse or child, you may have to pay up to 60 percent of your disposable income. If you are more than 12 weeks in arrears on support payments, you can be required to pay a penalty of an additional 5 percent.
Particulars of Wage Garnishment
While all of the types of debt mentioned below are subject to wage garnishment without court orders, different rules apply to different types of debt as seen below:
When the U.S. Department of Education, or a collection agency representing its interests, garnishes your wages without a court judgment, the process is known as administrative garnishment. Unlike some other government agencies, the Department of Education can garnish only 15 percent of your disposable income, and not more than 30 times the minimum wage.
The amount of money the federal government can have deducted to collect your back taxes depends on how many dependents you have and your deduction rate. State and local governments may also be able to garnish your wages to collect unpaid state and local taxes.
Total Amount of Garnishment
In some cases, you may be subject to more than one garnishment; you may, for example, have debts including unpaid sales tax and child support arrears. In such cases, the total amount that can be garnished is limited to 25 percent of your disposable income. In wage garnishment, support payments take precedence over all other debts.
While a number of items can be repossessed, such as rent-to-purchase furniture or appliances, repossession almost always refers to repossession of vehicles. Unless you purchase your vehicle for cash, the company financing your purchase or leasing your vehicle maintains at least a portion of ownership and may repossess the vehicle if you default on your loan or lease payments. This is because when you leased or financed the vehicle you signed a legal contract requiring that you make monthly payments in a timely manner for the duration of the lease of purchase loan.
Alternatives to Repossession
We all know how humiliating and inconvenient repossession is for the debtor, but, in reality, it is no picnic for the company doing the repossessing either. Not only are there logistics and costs involved in the process, but, since vehicles depreciate in value quickly, a repossessed vehicle may not even be worth as much as the debtor owes. For this reason, most lenders are willing to work with you to establish a viable pay-back plan rather than repossess your vehicle.
The Repossession Process
Once you have defaulted, the lender does not need to get a court order to repossess your car and can tow it away from any public or private property, including your friend’s house, the shopping center parking lot, or your own driveway. There is, however, a major restriction: the lender cannot, according to Georgia law, “breach the peace” during the repossession process. This means that the towing company may not break into your garage or move other vehicles out of the way in order to claim your vehicle. If unable to repossess your car without breaching the peace, the lender must get the courts involved.
After your vehicle has been repossessed, the lender is obligated to make you aware of your right to “redeem” your car by paying off the remaining balance within 10 days of the repossession. You can also insist that the car be sold at public auction to ensure that it is sold at a reasonable price, but you should remember that the costs involved in towing, and any remaining debt after sale, will come out of your pocket.
If you find yourself in danger of wage garnishment or vehicle repossession, or have already had undergone one or the other, Alex Dolhancyk, a highly skilled debt relief and bankruptcy attorney, is available to help you review your best options. He can be reached for a free consultation by phone or by filling out a contact form on this website.
The Dolhancyk Law Firm serves clients throughout Peachtree City, Newnan, Fayetteville, Fayette County, Coweta County, and Spalding County.