Many creditors use garnishment as a tool for collecting on a monetary judgment. A garnishment orders a third-party to pay money, otherwise owed to you, directly to the creditor. A wage garnishment and account garnishment are the two most common types. Wage Garnishment A wage garnishment occurs when the creditor serves your employer with garnishment papers. The employer is ordered to pay a certain amount out of each of your paychecks directly to the creditor (or sometimes to the court). Your employer must comply with the garnishment documents. Failure to do so could result in the employer being held liable for the amount due to the creditor. New Jersey law provides significant protection for consumers facing wage garnishment because no more than 10% of a consumer’s gross salary may be garnished. Additionally, certain paycheck deductions are exempt from wage garnishment, including:
- Federal, state and local taxes
- Social Security payments
- State pension payments
- Workers’ compensation awards
- Disability benefits
- Unemployment insurance
Account Garnishment An account garnishment occurs when the creditor serves the garnishment documents to your bank or other account-holder. In contrast to a wage garnishment, the account garnishment typically allows the creditor to have the full amount owed taken out of your account. Most account garnishments are not continuing like a wage garnishment, but rather, a one-time “hit” on your account. Garnishments in Bankruptcy So what happens to a garnishment if you file for bankruptcy? The automatic stay is effective as soon as you file your bankruptcy case. The stay prohibits collection activity, including garnishments, from continuing against you. This means that once your Chapter 7 or Chapter 13 has been filed, you start receiving your full paycheck again and possibly discharge (eliminate) the debt linked to the garnishment. If you have garnishments pending against you, contact Levitt & Slafkes to learn how bankruptcy can help! We are bankruptcy lawyers who know how to make a difference in your financial situation. We have experience you can rely on and we care about your results. Contact our New Jersey law firm online by filling out the form or by calling 973-323-2953 to schedule a free initial consultation with an attorney at Levitt & Slafkes, P.C..