If you are struggling to meet your monthly financial obligations, and barely earning enough to make it paycheck to paycheck, a wage garnishment can be more than an inconvenience. It can be absolutely devastating. Ohio law allows for wage garnishments. It also provides relief for some garnishments by way of bankruptcy.
What is a Wage Garnishment?
When you fall behind in payments for your debts, your creditor may get a court judgment ordering you to pay. The creditor can also get an order from the court that allows them to garnish your wages. A wage garnishment order is a court order to your employer to take a certain amount out of your wages and send it to the creditor. Some creditors can order your wages to be garnished without a court order. This includes:
- State and federal government for payment of taxes
- Court-ordered child support
- Defaulted student loans
In Ohio, with only a few exceptions, a creditor can only take up to 25 percent of your disposable income. Disposable income is what is left to you after taxes and other mandatory deductions have been withheld. Health or life insurance are not considered mandatory deductions, so you will have to pay those out of what is left after the garnishment.
If there is more than one creditor who has garnished your wages, the maximum amount of your wages that can be held back is still 25 percent unless the garnishment is for child support. In that case, it is possible that up to 50 to 60 percent of your earnings may be garnished for child support.
Impact of Filing for Bankruptcy on Wage Garnishment
When you file for Chapter 7 or Chapter 13 bankruptcy, all collection action must stop. Since garnishment is considered a collection action, garnishments must stop during a bankruptcy. This does not apply to garnishments for child support. A bankruptcy attorney can inform you as to any other exceptions that might apply.
Although the bankruptcy trustee sends a notice to your creditors that collection action must stop, you should contact the creditors that have gone after your wages and inform them that you have filed for bankruptcy.
Also, you should give the payroll department of your company notice that you filed for bankruptcy to be sure the garnishment stops. Any garnishments that occurred after the date you filed for bankruptcy must be returned to you except those taken for child support.
At the close of the bankruptcy proceeding, debts that are discharged that were the subject of a garnishment before are no longer debts. Thus, the garnishments will no longer be in effect.
For more information on wage garnishment and bankruptcy, contact the Chris Wesner Law Office. We will evaluate your individual situation and together we will decide how to proceed.