Can You Stop Wage Garnishment on Your Credit Card Debt?

You know what’s worse than having credit card debt? Having your wages garnished to pay for it. Needless to say, it’s a stressful event.

There are two types of garnishment: Wage garnishment and nonwage garnishment. With wage garnishment, your creditor takes part of your wages right out of your paycheck. But with nonwage garnishment, your money is seized from your bank account.

Typically, with credit card debt, your creditor has to sue you in court and win before a wage garnishment can happen. But in cases that involve government entities, student loans or child support, a wage garnishment can happen without involving the court.

Whether or not you can stop wage garnishment depends on where you are in the garnishment process.

[Read: Best Credit Cards for Bad Credit.]

You Haven’t Been Sued Yet

If your credit card issuer hasn’t sued you yet or sent your account to collections, then call it today and explain what happened. But plan your bullet points so you sound logical and calm on the call. Issuers have a hardship department that can offer help for about 12 months.

If you have so much debt that a short-term solution, such as lower monthly payments or a temporarily lower annual percentage rate won’t help, then you might need to talk with a credit counselor about your best options. I recommend starting your search with the National Foundation for Credit Counseling.

What if your delinquent credit card account has been sold to a collection agency? The collection agency is now your creditor, so that’s whom you’ll have to negotiate with. But proceed carefully and know your rights before you talk to a debt collector.

Now You’re Being Sued

As soon as you know you’re being sued, get a lawyer to protect your legal rights. And whatever you do, don’t ignore the lawsuit. It will not go away. If you don’t respond, your creditor gets a default judgment in its favor.

So take action right away. The credit card company will have to prove in court that you owe the debt. If it’s still early in the process, you can object to the garnishment if you think it’s unfair or unlawful. You have a limited time to respond, usually about 15 days, but it could be more or less. Your attorney can help you navigate this step.

But what happens if you choose not to fight or if fighting the case is unsuccessful? The plaintiff (the creditor) wins a money judgment, which it can use to get a wage garnishment order.

Once there’s been a judgment against you, the creditor files the papers with the court to start the procedures for garnishment. Typically, you’ll get what’s called a Notice of Garnishment of Personal Earnings from the court.

[Read: Best Secured Credit Cards.]

Ways to Protect Your Wages from Garnishment

If you really do owe the money to the credit card company or debt collector, then stopping the garnishment is difficult. But even if you can’t stop it, you might be able to reduce the amount.

You can settle the debt with the creditor. This works best if you offer to do this before you’re sued (or at least before you’re taken to court). If your creditor hasn’t already won a judgment against you, then by all means explore this.

The advantage for the creditor is that it can avoid the court process and legal fees. But sometimes deals are hard to strike. If you’re granted a reduced amount to pay, you might owe taxes on the amount forgiven. So proceed with caution (and with the advice of an attorney).

You can file for bankruptcy. This is an extreme choice, but it does stop garnishment. This usually wipes out at least a part of your unsecured debt, depending on the type of bankruptcy. But this is a choice you’d make if your situation is more dire than just being faced with a wage garnishment. To get an assessment and some advice about your options, consult with a bankruptcy attorney.

If you can’t (or won’t) settle the debt, and bankruptcy isn’t an option, then take a look at the exemptions in your state. You might not be able to stop the entire garnishment once the courts have ruled against you, but you might be able to get the amount adjusted if you’re unable to support yourself.

[Read: The Best Credit Cards for Fair Credit.]

Wage Garnishment Exemptions

According to the Department of Labor, for ordinary wage garnishments, your creditor can only garnish the lesser of these two things: either 25 percent of your disposable earnings or the amount of your disposable earnings that’s greater than 30 times the federal minimum wage, which is $7.25 per hour.

These are federal laws designed to protect you from being unable to support yourself. Keep in mind that the types of exemptions vary by state. For instance, Florida has an exemption for “head of family.” If an individual provides more than half the support to another person or child, then you might qualify for an exemption.

In addition, there are types of income that are generally exempt from garnishment. A creditor can’t garnish Social Security, child support, alimony and disability benefits.

More from U.S. News

What to Do If You Lose Your Job and Can’t Make Your Credit Card Payments

Wage Garnishment: What Is It and How Can It Impact Your Income?

What to Do If You’ve Fallen (Way) Behind on Your Credit Card Payments

Can You Stop Wage Garnishment on Your Credit Card Debt? originally appeared on usnews.com

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