GARNISHMENT OF WAGES UP 121% IN PHOENIX
A wage garnishment is a legal process by which a creditor (including child support, taxes, banks or others who are owed money), by virtue of a court order, is allowed to take a portion of a person’s paycheck before the person receives it. It is usually the last straw for many people, who then have no other option but to file bankruptcy. Indeed, many have filed because they were unable to make payment arrangements with their creditors, and were forced to seek protection from the bankruptcy court in order to survive. Most garnishments are limited to 25% of take home pay by federal law, but tax and child support garnishments can be as much as 50%. A new report from the payroll company, ADP, states that garnishments are up 121% in Phoenix since 2004. That huge increase illustrates the problems with the economy in the state of Arizona in the last several years. Overall, the report has bad news across the country. Garnishment rates for mid-range and mid-career workers (ages 25-44) have the highest levels of debt, apparently due largely to child rearing responsibilities and divorce. Garnishment rates for child support were highest among those earning between $40,000 and $60,000. One takeaway from this report is to be aware of the rights of creditors. It is not just governments and child support creditors who are able to garnish wages. A credit card company, a hospital, a landlord or a collection agent can sue, obtain a judgment from a court, and garnish wages. This is a surprise to many people. The fact that garnishments are on the rise is evidence that the economy has not quite recovered, despite many headlines claiming such. Bankruptcy offers relief from garnishments, which can be either temporary or permanent. Appropriate legal counsel is advised if a garnishment is eminent. Also, don’t expect to be notified before your wages are garnished; the courts do not require you being personally notified before the garnishment begins.