San Diego Bankruptcy Lawyer: What is a Wage Garnishment, and How Do I Stop It?
What is a wage garnishment?
If you do not pay a debt that you owe, a creditor may sue you to collect the money. If the creditor wins the lawsuit they become known as a judgment creditor. The judgment creditor can request a writ of garnishment from the court. The writ of garnishment is a court order that is sent to your employer with instructions to withhold a certain amount of money from your paycheck until the judgment debt is paid. The money withheld from your paycheck is first sent to the county sheriff’s office and then turned over to the creditor. A judgment creditor may be paid up to 25% of the judgment debtor’s take home pay. The following is a link to a calculator that will help you compute your take home pay if you are being garnished http://www.money-zine.com/Calculators/Loan-Calculators/Wage-Garnishment-Calculator/. If there is more than one judgment creditor the garnishments are paid in the order that they are received by the employer except that government and child support creditors are paid first as a priority no matter when they are received later. Generally, the total amount paid to all judgment creditors cannot exceed 25% of the employee’s take home pay. A major exception exists for child support and certain other governmental levies that may be for as much as 50% of an employee’s take home pay.
Governmental creditors may be able to garnish your wages directly without suing you or obtaining a court order. This type of garnishment is known as an administrative levy. Typical administrative levies are for unpaid taxes, child support, student loans, overpayments of government benefits, and some court fines. An administrative levy is sent directly to the levying government agency.
There are three agencies in California which impose wage garnishments (also known as an Earnings and Withholding Order) on individuals and business for past due tax debts and related liabilities.
The California Franchise Tax Board may impose a wage garnishment (Earnings and Withholding Order) or bank levy for collection of past due state income and corporate taxes, child support, wages due under the labor code, vehicle licensing fees, court ordered debts, assessments and penalties due under the labor code and/or student loans.
The California Employment Development Department may impose a wage garnishment (Earnings and Withholding Order) or bank levy for collection of past due employment taxes or an overpayment of unemployment benefits.
The California Board of Equalization may impose a wage garnishment (Earnings and Withholding Order) or bank levy for collection of past due sale and use tax. Other taxes and fees the Board of Equalization seek to collect include: private railroad car tax, state assessed property tax, timber yield tax, alcoholic beverage tax, cigarette & tobacco products taxes; emergency telephone users surcharges; energy resources surcharges; natural gas surcharges, tax on insurers, aircraft jet fuel tax, childhood lead poisoning prevention fee, diesel fuel tax, interstate user diesel fuel tax; motor vehicle fuel tax; oil spill response, prevention and administration fees; underground storage tank maintenance fee; and the use fuel tax.
For more information on California state levies visit the following link http://www.ftb.ca.gov/individuals/ewot.shtml .
On the federal level the IRS may also impose a levy for money taxes and other money owed to the U.S. government. For more information on IRS levies follow the link to http://www.irs.gov/pub/irs-pdf/p1494.pdf .
Child support payments can also be made to be paid through wage garnishment under California law. The party who pays child support or spousal support — the payor — can have part of his or her salary garnished or assigned by the employer and paid directly to the recipient party. A child support garnishment may be for up to 50% of the employee’s take home pay. It is very difficult to contest this type of a wage garnishment. In San Diego, “The Department of Child Support Services (DCSS)” Collects and distribute child and spousal support payments. A link to their website is http://www.sdcounty.ca.gov/dcss/ .
Can my employer fire me because my wages are being garnished?
An employer cannot discharge an employee because a garnishment of wages has been threatened or if the employee’s wages have been subjected to a garnishment for the payment of one judgment. Labor Code Section 2929(a)
(a) As used in this section:
(1) “Garnishment” means any judicial procedure through which the wages of an employee are required to be withheld for the payment of any debt.
(2) “Wages” has the same meaning as that term has under Section 200.
(b) No employer may discharge any employee by reason of the fact that the garnishment of his wages has been threatened. No employer may discharge any employee by reason of the fact that his wages have been subjected to garnishment for the payment of one judgment. A provision of a contract of employment that provides an employee with less protection than is provided by this subdivision is against public policy and void.
(c) Unless the employee has greater rights under the contract of employment, the wages of an employee who is discharged in violation of this section shall continue until reinstatement notwithstanding such discharge, but such wages shall not continue for more than 30 days and shall not exceed the amount of wages earned during the 30 calendar days immediately preceding the date of the levy of execution upon the employee’s wages which resulted in his discharge. The employee shall give notice to his employer of his intention to make a wage claim under this subdivision within 30 days after being discharged; and, if he desires to have the Labor Commissioner take an assignment of his wage claim, the employee shall file a wage claim with the Labor Commissioner within 60 days after being discharged.
The Labor Commissioner may, in his discretion, take assignment of wage claims under this subdivision as provided for in Section 96. A discharged employee shall not be permitted to recover wages under this subdivision if a criminal prosecution based on the same discharge has been commenced for violation of Section 304 of the Consumer Credit Protection Act of 1968 (15 U.S.C. Sec. 1674).
(d) Nothing in this section affects any other rights the employee may have against his employer.
(e) This section is intended to aid in the enforcement of the prohibition against discharge for garnishment of earnings provided in the Consumer Credit Protection Act of 1968 (15 U.S.C. Secs. 1671-1677) and shall be interpreted and applied in a manner which is consistent with the corresponding provisions of such act.
What may I do to stop or forestall a wage garnishment?
You may file an exemption or you may file for bankruptcy protection.
What is an exemption?
Exemption - In California you may be able to stop the Wage Garnishment through filing an exemption. You may be able to have the wage garnishment stop or reduce the amount being garnished if you can show that the money is needed to support you or your family. If you can show that the money is needed to provide for the basic necessities of life then you may be able to stop the garnishment. There are several steps you need to take in order to stop the garnishment through filing a claim of exemptions in California. First you need to:
- File a Claim of Exemptions Form. The claim of exemptions for California can be found here:
California Claims Exemption for Wage Garnishment
- Fill out a Financial Statement. You must include a financial statement with your Claim of Exemptions. The financial statement details your income and your expenses. The California form can be found here:
You can propose to pay the creditor a certain amount as part of your Claim of Exemptions. If the creditor does not oppose it then you may be able to avoid garnishment and repay the debt based on the proposed amount. IF the creditor opposes the Claim of Exemptions then a hearing will be held in which you will have to prove that garnishing your wages will result in you not being able to provide for you or your families support. At this hearing the judge will decide whether withholding 25% is too much and how much should be withheld from your paycheck.
If the creditor objects to your claim of exemption, and you are above bare subsistence usually the court will all the garnishment to continue in spite of the claimed exemption. Nonetheless filing the claim of exemption may still be a valuable tool for forestalling a garnishment while a bankruptcy case is being prepared.
Bankruptcy
Filing for bankruptcy will immediately stop all garnishments except for family support payments. When you file for Chapter 7 or Chapter 13 bankruptcy the United States Bankruptcy Court automatically files an injunction known as the automatic stay. The automatic stay automatically stops lawsuits, foreclosures, garnishments, and all collection activity against the debtor the moment a bankruptcy petition is filed. When we have a client with a wage garnishment, as soon as their case is filed we send the employer, sheriff, judgment creditor, and where applicable government agency a copy of the court filing notice along with a letter informing the recipient that you are under the protection of a court order and the garnishment must according to federal law be released immediately. Failure by a party to release a garnishment may result in order for contempt from the court and an obligation to pay damages and fines.
For assistance with bankruptcy in San Diego contact Ray today.
