Can Credit Card Companies Garnish your Wages?

In almost all states creditors are allowed to garnish your wages if you have not paid off your debts. This allows creditors to receive their money that you owe them if you have not paid in time.

What is Wage Garnishment?

Wage garnishment is when creditors or certain entities are allowed to take part of your wages to pay off the debt that you owe them. Examples of things that may allow wage garnishment include child support and unpaid state taxes.

Thus, if you owe your credit card company money, credit card companies can file lawsuits against you in order to receive the money that you owe them. Thus, if you are making money but are not paying your credit card companies, they have the right to take some of your wages to pay off your debt.

State policies

All states but four allow wage garnishment for creditor debts. The only states in which creditors are not allowed to take a part of your wage are North Carolina, Pennsylvania, South Carolina, and Texas. Thus, if you live in 46 out of the 50 states, you could be subject to wage garnishment.

Some states have individual policies regarding what percentage of your wage can be garnished, but less regulatory states just follow the federal law. The federal law states that up to 25% of your wage can be garnished, meaning that if you make $10 an hour, up to $2.50 can be awarded to your creditors by the court.

Process

For creditors to receive their money through wage garnishment, they must go through a process full of hassles.

First, credit card companies must sue you in court. They cannot demand you to give up part of your wage without this process officially going through the court.

Secondly, they must be awarded a money judgment in court. A money judgment is a court order that awards the creditor a certain sum of money from the lawsuit. Thus, it is up to the court’s discretion on how much money you will end up owing.

Lastly, they must get a court order directly ordering your funds from your employer. Once this court order is attained, your employer will send a court-mandated sum of your wage directly to the creditor, meaning that you will never see that money.

What you should do?

If you think your wage is about to be garnished by credit card companies, you have a few options of what you can do next. First, you should validate the debt you owe with the credit card company. You should ask for formal proof of the obligation that you need to pay. Secondly, you should respond to all court summonings. If you do not show up to court, the court will most definitely approve of any wage garnishments.

There are a few alternative ways that you can deal with wage garnishment. First, you can look to settle with the credit card company. It can be a hassle to go through court and complete this process, so creditors may be willing to reach a settlement in order to prevent wage garnishment. Secondly, you should review state exemptions. As mentioned above, different states have different rules, so you should review your state’s exemption rules and see if you can file an exemption claim to the judge. Worst case scenario, you can also file for bankruptcy. This might wipe out some of your other debt too, but this will likely ruin your credit score, so you should look into the consequences before you go this route.

Conclusion

In conclusion, credit card companies can garnish your wages in almost all states. You should review your state’s laws before deciding on what to do if you are at threat of wage garnishment. Finally, there are multiple ways in which you can deal with the situation, such as validating the debt, reaching a settlement, or filing bankruptcy, so you should research what is the best way to deal with your particular situation.