Wage garnishment, the uscourts.gov website explains, is a “legal proceeding whereby a creditor seeks to claim the wages of a debtor.”
In some states, wages can’t be garnished. Unfortunately Indiana, where I have been a debt consolidation lawyer for more than 26 years, is not one of those debtor-friendly states.
What does happen here is that In Indiana, a court order can be issued requiring your employer to withhold part of your wages and send the money to a creditor to whom you owe money. Garnishment can come out of salary, commissions, hourly, weekly, or daily wages, and even out of bonuses and income from a pension or retirement plan..
One question that’s asked frequently by visitors to all five of our Zuckerberg bankruptcy law offices is “How much of my wages can they garnish?” Answer: whichever of these two amounts is greater:
25% of disposable income
- Whatever amount of disposable income exceeds 30 times the federal minimum hourly wage. Since the basic rate as of this writing is $7.25, and 30 times $7.25 is $217.50, any weekly earnings over $217.50 can be garnished.
When you file personal bankruptcy in Indiana, though, that triggers the automatic stay which prohibits and stops most collection activities by creditors. This means that wage garnishments are also stopped as long as the bankruptcy stay is in effect. If a creditor wants to resume collection efforts, it must ask the court to lift the stay. The court will lift the stay only if the creditor has a valid reason for doing so. An unsecured creditor such as a credit card company simply wishing to resume a wage garnishment is not a valid reason for the court to lift the stay.
One big worry a client recently shared with the Columbus bankruptcy lawyer who is my colleague is that her employer would fire her if it received a garnishment order. As all good bankruptcy attorneys in Indiana know, the simple answer to this concern is reassuring: Federal wage garnishment law prohibits employers from discharging an employee for no other reason than that the wages of that employee are being garnished by a single creditor.
However, there's a "catch". If more than one creditor is garnishing your wages, you're not protected by that law against losing your job. If you have more than one creditor that could potentially get a court order of wage garnishment, you needs to act quickly, sitting down with an Indiana lawyer for bankruptcy right now, before any more steps can be taken by the creditors.
The “W” of bankruptcy in Indiana is not to be taken lightly!
Categorised in: Bankruptcy Indiana
This post was written by Mark Zuckerberg