I often have clients contact me once their employer starts deducting a garnishment from their paycheck. Many are confused about the difference between an actual wage garnishment and deductions due to a wage assignment. A garnishment can only occur if the creditor has gone to court and obtained a judgment against you. A wage assignment on the other hand, is a voluntary agreement entered into by you, usually at the time you entered into the loan agreement with the creditor.
Under Illinois a wage assignment must be a document that is completely separate from the loan itself, and must be clearly labeled a “wage assignment.” Before the creditor can send the wage assignment to your employer, you must be at least 40 days behind on your loan. The creditor must mail both you and your employer a notice that they will begin garnishing your wages in 20 days if you don’t get caught up on your loan payments. This notice has to be sent to you by regular or certified mail, so you should receive advanced notice that your wages are going to be garnished.
Because a wage assignment is a voluntary agreement, it is revocable in writing at any time – including AFTER it has been sent to your employer, or even after the garnishment has already started (although you will not be able to get any funds back that have already been taken, and can only stop future garnishments). To do so, you must send a letter, in writing, to both the creditor and to your employer indicating that you are revoking the wage assignment. Sign and date the letter, note the creditor’s account number on it if possible, and make a copy of the letter for your records before you serve it on the creditor. You can deliver it in person (make a note of who you delivered the letter to), or you can mail it (certified mail is advised, as then you have a record of receipt).
If, instead, you have received notice of a garnishment as a result of a court judgment, these are allowed by law as a method of enforcement, and cannot simply be stopped by mailing a letter. However, first make sure that the deduction is correct. The amount that can be deducted with either a wage assignment or a garnishment is the lesser of 15% of your gross pay, or the amount of your net pay over 45 x the federal or state minimum hourly wage ($371.25 per week), whichever is greater. That means that you can only have a wage assignment if you take home over $371.25 per week. (Please note that net pay for garnishment purposes is gross pay minus only federal and state taxes, social security and Medicare deductions. Other deductions like insurance, union dues, or for 401(k)/retirement have to be added back in to determine your net pay in a garnishment situation to determine if you make over $371.25 per week.
Ok, so what can you do if your income is over this amount and, thus, the garnishment is legitimate? Answer: file bankruptcy. A bankruptcy will stop all garnishments as soon as the case is filed. This is because the bankruptcy filing starts the automatic stay, which halts all court cases, including garnishments, and no new cases can be filed. A Chapter 7 bankruptcy lasts approximately 3 months, and at the end you will receive a Discharge of Debts, so you will no longer owe the debt at that time, and the creditor can no longer garnish your wages for it.
Have questions about bankruptcy? See our other articles to learn about the process:
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