Wage Garnishment Process

The Ins and Outs of Wage Garnishment, and How to Avoid It

July 29, 2011 /24-7PressRelease/ -- In the world of debt collection, wage garnishment is the equivalent of bringing in the "big guns." It's a regular payment to a creditor, taken from a paycheck by the employer. This is a powerful tool used by creditors to get repaid, but it also requires that they initiate a lawsuit -- something many are reluctant to do until they've tried other methods first. In addition, as might be expected with this rather drastic method of repayment, there are state and federal laws that govern the process that restrict how much can be taken from a person's paycheck.

Wage garnishment begins with a court issuing a judgment finding that the debtor actually owes the money. Before going to court, the creditor (which might be a bank or another company that is owed money) usually makes its own debt collection efforts. If that fails, then the creditor either turns the debt over to a collection agency (who gets to keep a percentage of the debts they recover) or a debt buyer, who buys the debt for pennies on the dollar and gets to keep all the money they recover. Only after these efforts are unsuccessful do companies take the final step of going to court.

Unfortunately, people with a lot of debt may become used to receiving threatening-looking letters in the mail from their creditors, and not pay attention when they receive notice of a court date. When the court date comes, if the debtor does not appear in court, the creditor will receive a default judgment, which means they "win" by default and the court will generally approve an order to garnish the person's wages. Thus it's always best to talk to an attorney if you receive notice of a lawsuit.

Even if wage garnishment is set up, there are limits to how much can be withdrawn. According to federal law, no more than 25 percent of the employee's disposable earnings (the money that is left after any federal, state and local taxes and other similar deductions are taken out) can be garnished. New Jersey law goes even further, limiting the deduction to 10% of the person's gross income, but stipulating that the court may order a larger percentage, taking into account the size of the debt, the person's financial circumstances, how long the debt has remained unpaid, and other circumstances. That makes appearing in court -- with an experienced attorney who can best present the case to the judge -- even more important for anyone wishing to avoid wage garnishment.

Bank Levies and Wage Garnishments | JPL Process Service

It is a tricky process but if you are owed money, you could possibly impose a bank levy or wage garnishment in order to obtain reimbursement.

A bank levy is when a debtor’s bank account is seized by the party they borrowed from. This is in order to satisfy a judgment. The lender does not even need the debtor’s bank account number. All that is needed is the bank or credit union the debtor keeps their money in.  JPL Process Service can help obtain this information for you.

In case you are wondering, there is nothing illegal about doing this. The State of California allows creditors this option as a means for repayment.

You will need to fill out several legal documents to impose a bank levy. Once completed, file them with the court. After, submit to your local sheriff’s office. Afterwards, a process server will serve the Notice of Levy (Enforcement of Judgment) to the bank or credit union.

The other option is wage garnishment. The State of California also allows this and grants the creditor the option to garnish up to 25 percent of the debtor’s pay.

This process requires post judgment research and due diligence prior. Just like with a bank levy, you must fill out several legal documents.

Then, you will need to submit them to the court to be filed. Once that is completed, the filed documents are given to the sheriff’s office. (Please note that the sheriff’s office must be in the same county where the Earnings Withholding Order will be delivered.)

Among the required legal documents is the Application for Earning Withholding Order. This will need to be filled out with the debtor’s employer information. JPL Process Service can help you obtain that information using our latest technology.

After you have submitted the documents and application to the sheriff, a process server must serve the debtor’s employer with the Earnings Withholding Order. The employer has 30 days to comply.

Of course, there are situations that might prevent a bank levy or wage garnishment.

These are a few reasons why the creditor may not be able to proceed with either option.

Debt Collection Improvement Act of 1996, Status of Selected Agencies Implementation of Administrative Wage Garnishment

Collect your court judgment

Complete guide to federal and state garnishment

Complete Guide to Federal and State Garnishment, 2009 Edition

Credit Manual of Commercial Laws, 1991