Financial distress presents myriad difficulties for struggling Georgia families, such as collection calls, damaged credit scores,  and difficulty buying a home. However, one of the worst consequences of financial problems is wage garnishments. Wage garnishment takes vital funds from debtors’ paychecks, depriving them of resources for essentials like food, utilities, shelter, and medicine.

If you face wage garnishment,  understanding how creditors identify your employer to serve a wage garnishment order and the potential consequences of a wage garnishment help you avoid becoming a victim. Equipped with the right information, you can make informed decisions and seek appropriate legal help.

Sources and Methods Used by Collection Agencies to Facilitate Wage Garnishments in Athens

Creditors have many tools and resources for discovering a debtor’s employer. Some of the common methods if identifying targets for wage garnishment include the following:

• Credit applications
• Public records
• Social media
• References and web searches
• Skip tracing

Credit Applications

When borrowers apply for credit, such as revolving accounts, personal loans, mortgages, vehicle loans, and any other form of credit, they must provide their current employer’s contact information. If the borrower later defaults, the lender’s collections department or a collection agency has access to the application. Unless the borrower has changed jobs, the application gives them the information they need to serve a wage garnishment order.

Public Records

While credit applications can point collectors in the right direction, the information may be out of date, requiring the collector to pursue other avenues. Public records are a go-to for bill collectors because they offer a fertile source of employment information. For example, if a debtor were previously subjected to wage garnishment, the debtor’s employment information would be in public court records.

Social Media

Social media is fantastic for contacting long-lost friends and keeping up with loved ones, but it also makes information we would rather keep private accessible to anyone with an internet connection.. Many people share significant personal information online, making it easy for bill collector to identify their employers on platforms like LinkedIn and Facebook.

Even if you diligently keep your social media pages private, collections agencies may glean employment information about you from other people’s postings. For example, someone may post a picture including you at a company picnic. If the collector finds this post, he knows where the direct wage garnishment.

References and Web Searches

Creditors may use more traditional methods of tracking employment information, such as contacting references provided on a credit application or conducting Google searches on the debtor.

Skip Tracing

Skip tracing refers to locating people who have left a certain area. For example, a tenant may skip out on paying his rent and skip town. If the landlord wants to collect, he’ll have to find out where the non-paying tenant has gone. Skip tracing uses various resources, including credit reports, public records databases, loan applications, and criminal background checks to locate people.

Often, the process of skip tracing provides employment information, which collectors can then use to execute a wage garnishment.

Once creditors identify a debtor’s employer,  they can serve the company with a wage garnishment order. The law requires employers to comply with wage garnishments. Wage garnishments can be stopped by petitioning the court for relief or satisfying the debt.

Bankruptcy quashes some types of wage garnishments, such as consumer debt. However, wage garnishments for priority debts, such as child support and most taxes, continue despite a bankruptcy filing.

The Impacts of Wage Garnishments in Athens

Georgia wage garnishments are subject to federal and state law. In Georgia, the maximum amount that creditors can garnish from an individual’s wages is 25% of disposable income or the amount by which a debtor’s weekly income exceeds 30 times the minimum wage, whichever is less.

For example, if a borrower makes $1000 per week and the employer deducts $200 for taxes, then the employee’s disposable income is $800. Therefore, the maximum wage garnishment is 25% of $800, or $200. In this example, wage garnishment reduces disposable income to $600 weekly.

Alternatively, if a worker puts in 40 hours per week at the federal minimum wage of $7.25 per hour, he makes $290 per week. Since 30 times the minimum wage per week is $217.50, then the wage garnishment is $290 – $217.50, or $89.50 weekly.

However, in this case, the wage garnishment must be the lesser of 25% of disposable income or 30 times the minimum wage. Accordingly, if the employer withholds $75 a week for taxes, the wage garnishment cannot exceed 25% or $215, or $53.75.

The consequences of wage garnishments can have devastating impacts on debtors. Wage garnishment can dramatically reduce a debtor’s disposable income, making it challenging to pay for essential living expenses, leading to a cycle of debt that can be difficult to break without intervention.

Can You Lose Your Job Because of a Wage Garnishment?

Federal law prohibits an employer from firing an employee because of a wage garnishment order for a single debt. However, these protections do not extend to garnishments for multiple debts. You have legal recourse for unlawful termination if you are fired for one wage garnishment. However, if you are let go for multiple garnishments, the employer can legally terminate your employment.

What Steps Do Collectors Take to Process a Wage Garnishment?

Understanding how wage garnishment works and how creditors locate debtors can be crucial for individuals facing such situations. With this knowledge, debtors can better prepare themselves, seek appropriate advice, and potentially navigate to a more secure financial future.

Most creditors need a court judgment before they can garnish wages, so they must start by suing the borrower and winning the judgment. With the judgment in hand, they can apply to the court for a wage garnishment order. Then they must serve it on the employer.

However, if the employer is unknown to the creditor, then they must conduct some detective work to identify the employer, as detailed above. Once the collector knows the employer, it can request the sheriff or other authorized person to serve the order.

Upon receiving the garnishment order, the employer must withhold the specified portion of the debtor’s wages. These funds are then sent directly to the creditor. The employer must notify the employee (the debtor) that a portion of their wages is being garnished according to the order.

For more information on wage garnishments in Georgia, you can refer to this comprehensive resource from the University of Georgia’s law department. It’s crucial for individuals facing potential wage garnishment to understand their rights and options and to consider seeking legal counsel.

Bankruptcy and Wage Garnishments

Filing for Chapter 7 bankruptcy triggers an automatic stay, a court order that immediately halts most wage garnishments. Wage garnishments for priority debts, such as child support and most taxes, survive the automatic stay. The stay provides some much-needed breathing room for debtors, and if the debt being collected through wage garnishment is discharged in the bankruptcy,  then the garnishment stops permanently. However, if the debt survives bankruptcy, the garnishment can continue.

Chapter 13 bankruptcy, often referred to as reorganization bankruptcy, also utilizes the automatic stay to stop wage garnishments. Garnishments subject to the automatic stay remain suspended for as long as the bankruptcy case remains active. In Chapter 13, the debtor restructures the debt through a 3-5 year repayment plan. Provided the debtor abides by these terms, the court discharges remaining eligible debts, ending wage garnishment for non-priority, unsecured debts

Both Chapter 7 and Chapter 13 provide powerful tools for stopping wage garnishments, but the effectiveness of filing bankruptcy depends on the types of debt in question. Therefore, we always advise consulting with a bankruptcy attorney when considering solutions to wage garnishments.

Even if you have large non-dischargeable debts, bankruptcy may still help by eliminating dischargeable debts and creating room in the household budget to pay the remaining obligations. Non-dischargeable debts include the following:

Child Support and Alimony

Child support and alimony are domestic support obligations, and wage garnishments for these debts are non-dischargeable. For instance, if a father is having his wages garnished for child support arrears, this garnishment would continue even if he files for bankruptcy.

Certain Tax Debts

Some tax debts may not be discharged in bankruptcy. For example, if a debtor’s wages are being garnished to pay a recent income tax debt, the garnishment might continue throughout the default and after the discharge.

Student Loans

While the automatic stay temporarily halts wage garnishment for student loan debt, these debts are not discharged in bankruptcy except in extreme cases, such as permanent disability. After the bankruptcy case, the wage garnishment for student loan repayment can resume. For instance, a teacher with wages garnished due to student loan debt would benefit from a temporary halt in the garnishment, but it would likely resume post-bankruptcy.

Fines, Penalties, and Restitutions

Criminal penalties survive bankruptcy. For example, a convicted fraudster cannot discharge restitution to his victims in bankruptcy.

Wage garnishments can put a significant strain on your financial health and overall quality of life. While understanding how creditors find your employer and initiate wage garnishments is helpful, you still need a long-term solution to your debt woes. Bankruptcy could offer a viable solution, stopping wage garnishments and providing a fresh start.

 

Consult a Wage Garnishment Lawyer Before Deciding the Best Course of Action

If you’re facing wage garnishment and considering bankruptcy, take the first step in resolving your financial challenges by contacting experienced legal professionals. Contact Morgan & Morgan bankruptcy lawyers in Athens, GA, who can provide the guidance and support you need during this critical period in your life. We can help you navigate the vagaries of the bankruptcy process and work towards securing a stable, sustainable financial future.

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