What is a garnishment? A garnishment is basically a legal collections tool where a creditor obtains a court order compelling an employer to withhold a portion of an employee’s wages. The amount that can be withheld is capped at 25%, however, the percentage may vary depending on the state issuing the garnishment and the type of debt. The cap applies to all creditors, meaning 25% is the most that can be withheld at any one time. Garnishments, however, are not limited to wages and can involve one time garnishment of bank accounts or personal property. Whether or not bank accounts, personal property or tax returns can be garnished will depend the individual state. Regardless, garnishments are usually not the first option for creditors and they usually take several months to process during which time you will be notified of the proceedings and have the opportunity to object to the garnishment.

Once a garnishment has been put in place, debtors have few options. Pay off the debt, seek to challenge the garnishment in court, (if you are considering this option, it should be done before the garnishment is approved by the court) or file for bankruptcy protection. With a few exceptions, such as garnishment for child-support or domestic support payments, the automatic stay which accompanies a bankruptcy filing will stop a garnishment and in certain circumstances may even require the creditor to return garnished property. If the debtor is successful in obtaining a discharge in a Chapter 7 bankruptcy, the debts which lead to the garnishment will be erased. In a Chapter 13, the bankruptcy plan can result in dramatically reduced payments.

In the end, if you are facing a garnishment it is important to consider your financial situation and whether you will be able to financially survive with 25% less of your income. If not, and if you have sufficient debts to justify filing for bankruptcy protection, you should speak with a bankruptcy attorney as soon as possible to determine the best course of action. Waiting until the garnishment has drained savings accounts or confiscated tax returns will only benefit creditors.

- Richard V. Stokan, Jr.