Wage garnishment is a problem for many Americans. If your wages have been garnished, rest assured that you are not alone. Here at Midtown Bankruptcy, we see this problem often with our clients. Many do not realize that they have options to protect themselves.
Even though you’re probably feeling scared, overwhelmed and frustrated right now, we can help you get back on your feet. Don’t let anyone scare you into thinking that you don’t have options or rights because you DO!
What is Wage Garnishment in New York?
Wage garnishment is a tool for debt collection. If a garnishment is in effect, a person’s earnings are required to be withheld by an employer. This money is then sent to the creditor to reduce the amount owed. Thankfully, there are limits on how much creditors can garnish from wages.
In New York, creditors can take up to 10 percent of your gross wages or 25 percent of your disposable income to the extent that it exceeds 30 percent of minimum wage. So, if your disposable income is less than 30 times minimum wage, it can’t be garnished at all.
To be clear, your wages are withheld by your employer, but a creditor initiates the process. Until your debts are settled or paid off, the garnishment will stay in effect. While this process helps creditors get back the money owed to them, it creates significant problems for the borrower.
Having some of your wages garnished may be embarrassing, but be aware that employers are not allowed to discriminate, fire or suspend you for wage garnishment. However, they may want to re-negotiate your employment terms, especially if you have multiple creditors garnishing your wages.
Unless you can stop wage garnishment in New York, it will stay in effect until you pay off your debts. This could be months or years.
How Can I Stop Wage Garnishment in New York?
There are several ways to stop wage garnishment. In fact, you can stop it before it starts! Before the creditor or collection agency can garnish your wages, they usually need to have a judgement. Essentially, this means they have to win the lawsuit, so you’ll know that wage garnishment is a possibility. (In New York, it is possible for a creditor to garnish your wages without a lawsuit.)
However, lawsuits are often not worth fighting. They can be long and expensive, so many people end up ignoring them and preparing for the inevitable. While we do agree that lawsuits usually aren’t worth fighting, you shouldn’t ignore them either.
If you don’t fight the lawsuit, your other option is to pay back or settle your debts. Your creditor may be willing to work with you on a repayment plan. But what if you’re not in a position to do any of these? You do have another option: You can file for bankruptcy in New York.
Automatic Stay: How Bankruptcy Can Stop Wage Garnishments
When you file for bankruptcy, a court order goes into effect. It’s called the ‘automatic stay’ and it prohibits creditors from taking or continuing to take action to collect debts. As long as the automatic stay is in effect, most collection activities are stopped. The bankruptcy judge will only lift the automatic stay if there is a reason to do so.
Not only can filing bankruptcy stop wage garnishment in New York, but also it can help you recover some of your garnished wages. However, to be successful, you must have a knowledgeable and experienced bankruptcy lawyer on your side. This process can be confusing, as there are some exceptions to the rules and the automatic stay is not absolute.
For example, if you’ve filed bankruptcy many times, you may not be granted an automatic stay at all. Or, the bankruptcy judge may only grant an automatic stay for 30 days. For maximum relief from creditors, you’ll need a bankruptcy attorney advocating on your behalf.
Keep in Mind – Bankruptcy Won’t Stop All Wage Garnishments
It’s important to know that bankruptcy won’t stop all wage garnishments. In a Chapter 7 bankruptcy, some debts aren’t dischrageable such as child support, some taxes and student loan debts. In a Chapter 13 bankruptcy, the goal is to repay your debts over a period of 3 to 5 years. The garnishments will stop as long as you’re in compliance with your plan.
Want to Stop Wage Garnishment in New York? Contact a Bankruptcy Attorney Today.
When you find out that your wages are being taken out of your paycheck, it’s normal to feel trapped in a bad cycle. You’re barely paying your bills and now your income is reduced.
Midtown Bankruptcy wants you to know that you do have options. Contact us today to speak with a bankruptcy lawyer who is knowledgeable in New York laws. We are often successful in stopping wage garnishments for our clients and even recovering some of the money lost. And by filing bankruptcy, you can start fresh and enter a new chapter in life.
Call or text Midtown Bankruptcy today at 212-244-2882 or 914-559-9500 for a free consultation.