Many people live paycheck-to-paycheck. Any loss of income can be devastating. For some individuals, losing some of their pay for a week or two could be difficult or impossible to overcome. However, if one of your creditors receives a wage garnishment order from the court, you could lose a substantial portion of your pay for many months or years.
What is a Wage Garnishment Order?
A wage garnishment order directs your employer to withhold a portion of your pay each pay period. The money is sent to a creditor to repay a debt. The garnishment continues until the debt is repaid in full.
Your employer must honor the wage garnishment order. You can try to fight the garnishment of your wages, but you have an uphill battle to undo a wage garnishment order. The time to fight is before the order is entered.
Wage Garnishment Begins with a Debt Collection Lawsuit
Some debts can be garnished from your wages without filing a lawsuit. For example, domestic support obligations (alimony and child support), student loans, and tax debts can be garnished without the creditor filing a lawsuit.
However, most creditors must file a debt collection lawsuit and obtain a judgment before the court grants a wage garnishment request. The process begins with the filing of a complaint. The creditor must serve you with a copy of the complaint.
You have just a short time to file a response or an answer to the complaint. If you ignore the complaint, the creditor can receive a default order granting its request for a monetary judgment. Once the creditor has a personal judgment against you, it can file a petition with the court seeking a wage garnishment order. Unless there is good cause not to grant the request, the court usually enters the wage garnishment order.
How Much Can They Take From My Wages for a Personal Judgment?
Arizona’s wage garnishment laws allow your wages to be garnished up to 30 times the federal minimum wage rate or 25 percent of net pay, whichever amount is less. You can petition the court for a lesser amount based on your income, but you must have good cause why your wages should not be garnished at the maximum amount allowed by law.
Does Bankruptcy Stop Wage Garnishment in Arizona?
Yes, filing a bankruptcy petition stops the wage garnishments. It does not matter whether you file under Chapter 7 or Chapter 13. The automatic stay provisions of the Bankruptcy Code prevent the creditor from continuing to garnish your wages without bankruptcy court approval.
Whether the creditor may begin garnishment again depends on the type of debt. If the debt is dischargeable in bankruptcy, meaning the debt is forgiven, the creditor cannot begin garnishing your wages again after your bankruptcy discharge is granted.
For example, if the original debt was related to medical bills or credit card debts, the debt should be eligible for a discharge. If so, the debt goes away when you complete your bankruptcy case. If the bankruptcy process is causing you stress or confusion, a qualified Mesa bankruptcy lawyer can offer informed legal advice.
However, if the debt is not eligible for a discharge, the creditor could resume the garnishment of your wages after the bankruptcy case is closed. Debts that are not discharged in bankruptcy include alimony, most tax debts, child support, and student loans.
If you file a Chapter 13 case, these debts are typically paid in full through your Chapter 13 plan, except for student loans. Therefore, you would not need to worry about wage garnishments for these debts after you complete the Chapter 13 plan. For student loans, they are deferred during the Chapter 13 case. You could resume payments after your case is complete to avoid wage garnishments.