Unpaid credit card debt will likely result in your creditor filing a collection lawsuit against you. If your creditor wins the case, it gets a judgment against you for the full amount past due, post-judgment interest (10% per annum in California), and possibly Plaintiff’s attorney’s fees. The judgment is good for ten years and renewable in ten year blocks thereafter until the debt is satisfied in full. One of the most popular methods to collect on a judgment is a wage garnishment. I have worked with a number of clients facing wage garnishments in my San Diego debt relief law firm. Here’s a list of the top 3 things you should know about California wage garnishments.
Top Things You Should Know About California Wage Garnishments
1. Creditors are limited in what they can garnish. California law states that creditors are limited to 25% of your disposable income. That’s the cap for all creditors combined and includes any garnishments for child or spousal support. If your garnishments are exceeding 25%, it’s against the law and you will need to seek court intervention to stop the excess garnishments.
2. You cannot lose your job due to a wage garnishment. Getting a notice from your HR Department that your wages have been garnished is embarrassing. Your personal financial woes have now become the business of your employer. Fortunately, there are laws in place that prohibit your employee from taking any action against you due to the wage garnishment other than complying with the wage garnishment order.
3. You can reduce or eliminate the amount being garnished. Once you receive notice of a wage garnishment you have limited time to take action to fight it. The first step is to complete a Claim of Exemption and mandatory Financial Statement, which gets served on the Sheriff’s office that served the garnishment order. Be cautioned that it’s not necessarily the Sheriff in the county in which you reside. You must serve the document to the Sheriff’s office that actually issued the garnishment order. You have a limited amount of time to file a Claim of Exemption so quick action is necessary to keep the Sheriff from releasing the garnished wages to the creditor. The creditor has ten days to file an Opposition to the Claim of Exemption. If no Opposition is filed the Sheriff will notify your employer and the garnishment will stop. Should your creditor object, the matter will be set for a hearing so a judge can decide how much, if any, the creditor is permitted to garnish. Most often, creditors object to your monthly expenses as being excessive. If you can prove that they are not, you might have a good chance of having the garnishment reduced or eliminated. But you have to have a decent argument with supporting documents to prove it.
Courts in San Diego have been rather consistent in reducing wage garnishments if you have proper backup, but a complete elimination is not as common. The reasoning is often that the judgment is a financial obligation that must be paid. Regardless, reducing a 25% garnishment can help keep you financially afloat while you figure out how to live with this reduction in income. This may also be a good time to negotiate with the creditor to reach a final settlement on the account, which would eliminate the garnishment. This works best if you happen to have a lump sum you can offer to settle. Bankruptcy should be your last option. I would encourage you to seek the assistance of debt settlement attorney if the court process scares you. Appearing in public in front of a judge can be an intimidating experience. Get the help of an experienced attorney if you are facing a wage garnishment and don’t think you can fight it alone.