Credit card companies can garnish your wages if you fail to pay your debt. However, they cannot do this without first taking certain legal steps.
How wage garnishment works
Before a credit card company can garnish your wages, they must file a lawsuit against you. If they win the case, the court will issue a judgment in favor of the creditor. This judgment allows the creditor to request a wage garnishment order from the court, which requires your employer to withhold a portion of your paycheck to pay off the debt.
Limits on wage garnishment
Tennessee law places limits on how much a creditor can garnish from your wages. Creditors are generally allowed to garnish up to 25% of your disposable income. Disposable income is the money left over after taxes and other mandatory deductions. There are exceptions, though, such as if you already have other garnishments in place, like for child support or taxes.
What you can do to stop garnishment
If you’re facing wage garnishment for credit card debt, you still have options. One option is to negotiate with the creditor to set up a payment plan before the garnishment begins. If the garnishment has already started, you can file a claim of exemption with the court, arguing that the garnishment causes undue hardship. Another option is filing for bankruptcy, which can stop wage garnishment and help manage your debt more effectively.
How bankruptcy affects wage garnishment
Filing for bankruptcy automatically stops most wage garnishments. This “automatic stay” goes into effect as soon as you file your case, giving you time to reorganize your finances or discharge the debt altogether, depending on the type of bankruptcy you file.
Moving forward after wage garnishment
Dealing with wage garnishment can be challenging, but it’s important to focus on long-term financial stability. Creating a budget and managing debt responsibly can help prevent future financial issues.
Taking proactive steps toward financial planning and debt reduction will put you in a stronger position moving forward.
