Wage garnishments for unpaid credit card debts have a way of kicking you when you’re down. If you struggled to make your payments before, you’re probably going through some tough financial times, and losing some of your paycheck to creditors can make life even more difficult. But if your wages are being garnished and you simply can’t afford it, there’s still help. Here are a few steps for appealing the garnishment.
Step 1: Know your rights
Wage garnishment laws vary by state, but by federal law, credit card companies can garnish at most 25% of your disposable income (your take-home pay after taxes, Social Security and insurance) or your disposable income above 30 times the federal minimum wage. These limits apply even if multiple creditors are taking a piece of your paycheck, but they don’t always apply for unpaid child support, back taxes and other debts.
Check your state’s laws as well, since many states protect your wages beyond federal guidelines.
Step 2: Talk to a financial counselor
When you’re trying to change a wage garnishment arrangement, it’s best to bring in backup. A financial counselor can help decide if and how you should appeal your garnishment, as well as make a plan for getting debt-free. He or she can probably provide some advice on how to make your money go further. If you can’t afford the financial counselor’s fees, ask if they use a sliding scale or provide free services to people earning below a certain income. Be sure to check any credit counseling agency against the U.S. Trustee Program as well as your state’s Attorney General Office to make sure that it’s legitimate.
Step 3: Formally object to the garnishment
You can also file a claim of exemption, which is a statement that you believe your garnishment should be changed or removed. One reason you can provide is that you can’t afford to live on your reduced wages. You might also be able to argue that your garnishment would be lower if it followed either state or federal guidelines.
If you’re in the military, you might have additional protection: Credit card garnishment is called an “involuntary allotment,” and you might be able to appeal those allotments. For example, you might be able to argue that you were serving overseas and therefore couldn’t make your court date.
Step 4: Consider bankruptcy
Bankruptcy is the nuclear option for debts that you can’t pay. Declaring Chapter 7 bankruptcy will get rid of most of your wage garnishments, but there are serious consequences for doing so. Bankruptcies can stay on your credit report for up to 10 years, making it difficult to qualify for and get good rates on car loans, new credit cards and mortgages. Declaring bankruptcy also involves going through debtor education courses, meeting with a judge and combing over your finances, so it’s hardly a quick fix.
If you’re struggling because your garnished wages aren’t enough to live on, you can and should try to work with your creditors and the legal system. Remember: If you declare bankruptcy, your creditors might never get repaid, so they might be willing to work out a more manageable plan. Wage garnishments can be changed, and you can get help.
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