If you have received a notice of wage garnishment, sometimes referred to as income withholding, it can be very stressful. While this type of court order is no joke, it’s important not to panic. There are options available that can stop wage garnishment from proceeding. Here are several steps you can take to try to overcome the threat of your wages being garnished.
Best Options to Avoid Wage Garnishment
1) Challenge the wage garnishments
Before you make any payments to your creditor, carefully review the information in your demand letter. Make sure the debts you are being threatened with wage garnishment over are legitimate. Verify that they are not debts that have already been paid. Confirm that they are indeed your debts and not someone else. If you find errors in the information you can file a written objection to the wage garnishment.
2) Negotiate a payment plan
In some instances you can negotiate a payment plan with your creditor to stop wage garnishment. This is only an option however if the wage garnishments have not yet started, but you have been threatened with a final demand letter. Most creditors are willing to work out a payment plan with you rather than file the expensive forms and go through the legal process of garnishing your wages. At the end of the day, your creditor just wants their payment; they don’t care how they get it. Once you have successfully settled on a payment plan, stick to it, do not allow yourself to fall behind on your new payments. It is highly recommended that after you have stopped wage garnishment that you create a budget for yourself to stay on the right path and keep yourself out of debt in the future.
3) Contact a Credit Counseling Service
Depending upon your specific situation, speaking to a Credit Counseling Service (CCS), like Green Path, could help you avoid wage garnishments. A CCS is a not-for-profit company that assists you in working with your creditors to get your debts paid through negotiating payment plans. A CSS will act as a middle-man for you and may have better odds of negotiating with your creditors than you do, as they are more familiar with the laws regarding wage garnishment. They will also help you develop a financial plan going forward to help you avoid this situation from occurring in the future.
4) Consider a Debt Consolidation Loan
Believe it or not you can use a debt consolidation loan to stop wage garnishment from happening. A debt consolidation loan is usually an unsecured personal loan that is used to pay off existing debts. However, in some cases you may be required to use collateral, such as your home or car in order to qualify for a debt consolidation loan. It is best to work with a financial institution you trust when using a debt consolidation loan to stop wage garnishment. However, if you cannot afford the payments on the consolidation loan, this may not be your best option, as you will only fall further into debt.
5) Look into a debt settlement program
Debt settlement and debt forgiveness programs can also be an option to stop wage garnishment. The debt settlement company will essentially take over communication with your creditors and attempt to negotiate a lower balance owed. Often times, your creditor will be willing to negotiate a settlement amount rather than go through bankruptcy. However, it is important to know that this option often comes with expensive fees and in some situations can damage your credit score even further. You really need to weigh the pros and cons of this option before proceeding; it is not the magical fix that it often seems to be.
6) File for Bankruptcy
Filing for bankruptcy to stop wage garnishment should be the last resort. If none of the above options work for you, and you truly cannot afford to have your wages garnished, then it’s time to contact a bankruptcy attorney. Filing for bankruptcy is a long and stressful process so it is important to try other options first. Bankruptcy will stay on your credit history for at least 10 years, which can have serious effects on your ability to buy or rent a home, get a car loan, and in some case can even affect your job opportunities. That being said, sometimes it is the only option to avoid wage garnishment.
Stopping wage garnishment from happening is possible and there are several options to consider. If you have been threatened with wage garnishment use your resources, like your financial institution or a credit counseling service, to help you develop a plan and move forward. You should also take this opportunity to reassess your financial habits and consider starting a budget to help you stay on track going forward. It’s never too late to get yourself out of debt and begin to rebuild your credit.