Monday, December 17, 2007

Garnishment: Facts You Need To Know

Garnishment: Facts You Need To Know

Garnishment permits a creditor to take your wages or bank account balances collect your debt. It works like this. The creditor gets a judgment against you from a court. A judgment is an order from the court telling you to pay the creditor. The creditor then gets a Writ of Garnishment from the court. That is an order from the court requiring your bank, or your employer, to pay your account balance or wages to the court. The court then turns the money over to your creditor. Before the court pays the money to the creditor, they give you a chance to show why the money shouldn’t be paid.

Before a creditor can garnish your account, they must have a judgment against you. There are two exceptions to this rule. First, tax authorities such as the Internal Revenue Service can garnish your accounts without first obtaining a judgment. Also, in some states, your wages and accounts may be garnished to collect unpaid child support.

Even if your paycheck or bank account is garnished, you may be able to get back or keep some of the money. Each state has different rules regarding exempt property --property that your creditors cannot touch. The most famous example of exempt property is O.J. Simpson’s $25,000 per month NFL pension. Even though he has judgments against him in excess of thirty million dollars, his victims’ parents cannot take any of Mr. Simpson’s pension payments.

In some states, all or, or a part of your wages are exempt. Most retirement plans are also exempt. Also, social security, SSI and disability payments are exempt. If you can prove to the court that the money in your account comes from these sources, you may be able to have it returned to you.

If you learn that a creditor is trying to garnish your paycheck or bank account, you should contact a lawyer immediately. If you did not have notice of the lawsuit, or if you are not the person named in the lawsuit then the judgment can be set aside. Also, if you file for bankruptcy, the garnishment will be stopped.

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