With interest rates on credit cards in this country averaging around 14 percent and moving to upwards of 20 percent for those who have poor credit, it is no wonder that people are suffering from some intense negative consequences of these predatory interest rates.

Here at Punch Associates, a firm that has solutions for people in debt, we often field questions about one negative consequence of debt, wage garnishment. The following, although not legal advice, is some important information about this sensitive situation.

What is a Wage Garnishment?

Wage garnishment is a legal process through which a creditor or a group of creditors are allowed to legally take a portion of your after-deduction wages from your paycheck if you default on a debt.

When Can a Credit Card Issuer or Creditor Garnish Your Wages?

In the case of defaulted credit card debt, the credit card issuer or another company that purchases the debt needs to fulfill a few requirements before they can just call your employer and take a portion of your wages. According to Nolo Press, they have to sue you and get a judgment against you as well as an order from the court to garnish your wages.

How Much Can Be Garnished?

The percentage of your after-tax wages that can be deducted will vary by state. According to Nolo Press, the federal guidelines in most cases is that 25 percent of your after-tax earnings can be taken out from your paycheck until the debt is paid.

How Much is the Debt?

A really big issue in all of this is that the credit card issuer has likely also assessed penalties and fees and added these to the principle.

What Steps Can I Take to Stop the Garnishment?

Nerdwallet states that that window to object to wage garnishment can be as short as five days. If you have been sued, you will need to respond immediately to the court and provide any paperwork that backs up your claims. The paperwork you receive with the notice of the lawsuit will show you how to respond.

Possible grounds for stopping a garnishment of wages include:

• You already paid the debt.
  
• A portion of your income is exempt from garnishment, such as social security wages.
  
• You have already discharged the debt in bankruptcy.
  
• The garnishment will keep you from paying for necessities, such as rent or food.
  

If you are challenging the garnishment because it will keep you from providing yourself necessities of life, you will need to fill out a claim of exemption with the court and also detail your finances. In any of the other cases, you will need to attach proof of your claim.

Bankruptcy will also stop a garnishment, but it is a really extreme measure that one should only pursue with the help of an experienced bankruptcy attorney. The judgment will stay on your credit score for up to ten years.

Can My Employer Fire Me for a Wage Garnishment?

Obviously, employers don’t like to be bothered with having to send a portion of your paycheck elsewhere each pay period. According to Nolo Press, federal law will protect you from an employer who fires you for one wage garnishment. If you have more than one wage garnishment, these protections end.

Can They Garnish My LLC’s Bank Account?

According to the San Francisco Chronicle, if the debt is personal, but you co-mingled your own personal funds in your LLC’s bank account, a judge may allow for garnishment of your LLC’s bank account as well.

How Can I Get a Better Handle on My Debts?

Rather than default on debt, it is good to try to reduce the interest rate you are paying. One means of doing this is through a balance transfer card. They are often offered at zero percent interest for a limited amount of time, usually 12 to 18 months. If you could pay off your debts within the zero percent window of time, they might be a good option.

For consumers who have more debt than they could pay off in a year or so, a debt consolidation loan allows the borrower to pay off their high-interest credit cards and stretch their payments out from three to seven years, often at a lower interest rate. At the lower rate, you will be paying down more of the principal each month.

At Punch Associates, we have solutions for people who are experiencing problems due to heavy debt. Contact us for answers