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San Diego Bankruptcy Blogs from January, 2013


If you owe a significant amount of money and have been unable to pay off your debts, your creditors may pursue wage garnishment to recover the money that you owe out of your paycheck. Wage garnishment is a means of collecting a debtor's money by ordering a third party (often an employer) to pay money out of that employee's salary, and sometimes this comes as the result of a court order. Wage garnishments will continue until other arrangements are made to pay off the debt or until the entire debt is paid.

There is a certain amount of income that is exempt from wage garnishment, and this number differs from state to state. The amount of money that is garnished also differs based on who is trying to collect from you. For debtors who are directly impacted by wage garnishment, this amount makes a significant difference in their lifestyle and the decisions they make. For debtors in San Diego and throughout California, the maximum amount that can be garnished is established by federal law.

According to federal law, there are two different formulas for how much can be garnished: the amount by which a debtor's weekly income is greater than 30 times the minimum wage, or 25% of disposable income. The formula that produces the lesser amount must be chosen, although some creditors are able to garnish at a higher rate (such as the IRS). Keep in mind that disposable income is defined as the income that remains after all of the legally required deductions are taken out of your paycheck. Obligations such as deductions for medical, vision or dental insurance, or contributions to a Medical Savings Account are not exempt and will be counted towards disposable income.

Also known as Earnings Withholding Orders ("EWO"), wage garnishments are only meant to be used to levy on monies earned by the debtor for personal services rendered. This can include commissions, bonuses, salary and wages. It is illegal for employers to not pay the amounts that are requested through wage garnishment, and employers who violate any of the federal laws will be held liable to pay civil damages and may be subject to criminal prosecution as well.

For more information about the federal rules regarding garnishment, please view the The Federal Wage Garnishment Law, Consumer Credit Protection Act's Title 3 (PDF) to see a chart that defines the legal limits of garnishment. For a free consultation to discuss your current financial situation and to learn if bankruptcy or another form of debt relief is right for you, call a San Diego bankruptcy attorney at San Diego Legal Pros today! Our team guarantees a discharge of debts or your money back, so call now.

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