What is Wage Garnishment?
If a court compels your employer to hold a percentage of your paycheck and pay that amount to your creditors, your wages are being garnished. What is the best response to the garnishment of your wages? You’ll need to consult a North Carolina wage garnishment attorney.
The details of North Carolina’s wage garnishment laws are exceedingly complicated. The basics are explained below, but if you are targeted with a wage garnishment, you must have an attorney’s personalized advice.
How does wage garnishment work in this state? Who may garnish your wages? What are your options and rights if your wages are being garnished? How will a wage garnishment attorney help you respond to a garnishment? Keep reading for the answers to these questions.
Can a Private Creditor Garnish Your Wages?
North Carolina allows wage garnishments only in the narrowest circumstances, and garnishment generally isn’t allowed as a method of debt collection. With a single exception, residents of North Carolina are shielded against a wage garnishment sought by a private creditor.
Here is the exception: Your wages cannot be garnished in the State of North Carolina by a private creditor for overdue auto loan payments, mortgage payments, credit card debts, or other loans – unless that private creditor has obtained a court judgment in a different state.
Who Else May Garnish Your Wages?
However, you could face a wage garnishment in this state if you default on any debt to a state or federal court or government agency. Under federal and state law, the IRS, the U.S. Education Department, and state tax and child support collectors may garnish someone’s wages without first going to court and obtaining a court order.
Garnishments are imposed for unpaid taxes and delinquent student loans, overdue alimony and child support payments, and overpaid unemployment benefits. North Carolina municipalities and counties that operate ambulance services can also impose wage garnishments for those services.
How Much Can Be Garnished?
Unless your wages are garnished for child support, up to 25 percent of your “disposable” earnings (what remains after your mandatory deductions) may be garnished, or the amount by which those disposable earnings exceed thirty times the federal minimum hourly wage, whichever is less.
When a North Carolina court issues an order for child support, an order to garnish wages for child support payments is included. In some cases, up to 60 percent of a parent’s disposable earnings may be garnished. Employers can also charge a fee for each paycheck that is garnished.
Should your own wages be garnished, federal law protects you from employer retaliation, disciplinary action, or termination – but only up to a point. If your wages are currently being garnished and a second garnishment is imposed, your employer has the right to fire you.
Should You Consider Bankruptcy?
Bankruptcy is not for everyone, and it has some serious negative consequences. Bankruptcy also can’t stop wage garnishments for alimony or child support payments. However, bankruptcy may be the most practical option for those whose wages are garnished for student loan or tax debts.
A Chapter 13 bankruptcy is one way to pay a tax debt (in a three-to-five-year period) or even to discharge a tax debt in some cases. Either a Chapter 13 or Chapter 7 bankruptcy can stop a wage garnishment for a student loan, but student loan debts aren’t dischargeable.
If a private creditor in another state garnishes your wages for a car loan, a mortgage, a credit card, or another debt, bankruptcy will stop the garnishment. You will need to speak about bankruptcy and your other options with a North Carolina wage garnishment lawyer.
A Chapter 7 bankruptcy can usually eliminate your unsecured debts to help you more easily pay a wage garnishment debt. A Chapter 13 bankruptcy (or “reorganization bankruptcy”) may also be helpful.
What More Should You Know About Bankruptcy?
A Chapter 13 bankruptcy will protect your home and personal property and stop a garnishment. This type of bankruptcy requires you to develop a repayment plan that will pay off from 0%-100% of unsecured debts in three to five years depending upon your household income, household size and non exempt equity in property you own. A North Carolina bankruptcy attorney can help determine a Chapter 13 plan that is best for you based upon your circumstances.
A Chapter 7 bankruptcy can also end a garnishment, unless your wages are being garnished for alimony or child support. A Chapter 7 bankruptcy will usually discharge all of your unsecured debt, including credit card and medical debt, bank overdrafts, and “payday” loans.
By eliminating these debts with a Chapter 7 bankruptcy, you will have more income to pay child support, alimony, tax, and student loan debts that are not dischargeable through bankruptcy. Not everyone qualifies for Chapter 7 bankruptcy, but most everyone may file a Chapter 13 bankruptcy.
What Are Your Options Apart From Bankruptcy?
Should your wages be garnished by any federal or state agency or court for fines, taxes, a student loan, alimony, or child support, you have these options:
Paying what you owe. This ends a wage garnishment.
Arranging an agreement to pay the debt in installments. The North Carolina Department of Revenue and the IRS often make these arrangements for tax debts. A North Carolina wage garnishment lawyer can help you make arrangements to pay your other debts.
If you can’t pay what you owe, even over three to five years, the best option might be to let the garnishment remain in effect and take no action at all.
As explained above, a bankruptcy will end a wage garnishment and free up those wages to pay a tax, student loan, alimony, or child support debt.
Finding the Help You Need
In some circumstances, other options may be available to you, but if your wages are garnished for any reason, you’ll need personal guidance and advice, and you’ll need that guidance and advice immediately. How should you choose a North Carolina wage garnishment attorney?
The award-winning lawyers at Gillespie & Murphy will review your options, explain your rights, and help you respond to a wage garnishment in the way that works best for you. A wage garnishment lawyer will provide the sound legal advice that helps you make the right choices.
When you are a client of Gillespie & Murphy, you will be shown every professional courtesy, and you will be treated with the dignity and respect you deserve. For your convenience, we have law offices located in New Bern, Wilmington, Jacksonville, and Greenville. Gillespie & Murphy offers in person, zoom and phone consultation/strategy sessions to better assist our clients.
If your wages are garnished, or if you need to learn more about bankruptcy or begin the bankruptcy process, call Gillespie & Murphy today at 252-562-0037 to schedule your first legal consultation without cost or obligation. At Gillespie & Murphy, we put the law to work for you.