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Wage Garnishments And My Employer: How Will Debt Collection Affect My Career?

When debt becomes too much to handle, it can be comforting to find ways to temporarily forget about financial issues. But if this is put into practice for too long, creditors will eventually use more aggressive methods than phone calls and letters to pursue debt repayment. Once certain steps have been completed, many creditors will choose to do so through a wage garnishment. A wage garnishment siphons an employee’s paychecks away until the debt, plus fees and interest, has been repaid. This usually spells financial trouble for the employee and means their employer will become aware of their financial situation. Have you received notice that one of your creditors has filed a lawsuit against you, or that they have obtained an order to garnish your wages? Read on to learn more about this issue and how it will appear to your employer. To schedule your free consultation with one of our experienced Arizona bankruptcy lawyers, call 480-470-1504.

Garnishee’s Answer

A Garnishee’s Answer is an important legal document that is part of the wage garnishment process. The employer must complete and file this form to acknowledge the wage garnishment and how much will be withheld from their employee’s paychecks. What is so important about this legal document? If the employer doesn’t complete their Garnishee’s Answer responsibilities within 10 days, they can be held financially liable for their employee’s debt- at least, specifically the one causing their wages to be garnished. This could create an awkward workplace environment, as the employer can’t legally terminate or otherwise penalize their employee for receiving one wage garnishment in a one-year period. This form must be filed in court and served upon the employee and the judgment creditor.

You can find a copy of the Garnishee’s Answer for employers in Arizona here. It is only one page, so it doesn’t require much time or an in-depth investigation from your employer. Your employer can charge a fee for their responsibilities related to the garnishment.

Can I Be Fired for a Wage Garnishment?

There are protections for individuals struggling with debt at both the state and federal levels. Federally, employees are protected from termination and other forms of discrimination in the workplace upon receiving a single writ of garnishment. However, this protection ends if that employee receives another writ of garnishment within the next 12 months. States can choose to add additional protections beyond protection from discrimination for one wage garnishment in a 12-month period. Arizona’s extra protections focus on those whose wages are being garnished to pay child support. An employee is still protected even if they have multiple child support wage garnishment orders. But, a new hire can be required to disclose these orders as part of the hiring process.

Child Support Wage Garnishments

Child support is one of the highest-priority debts to be paid, even when that person has fallen behind on several different types of debts. A parent who doesn’t pay court-ordered child support could lose their driver’s license and passport, or even be jailed for failure to pay. But many parents have wage garnishments to pay their child support in place for convenience. Why risk falling behind on child support when your most important bill could be paid automatically from each of your paychecks? This would risk the parent having their wages garnished at a particularly high rate. Most types of debts are limited to garnish 15% of an employee’s wages in Arizona. But the limits in place for child support wage garnishments are much higher. When a parent has other dependents, such as a spouse or other children, their maximum child support wage garnishment is 50%. If the parent doesn’t have other dependents, their child support wage garnishment can be as high as 60%. This increases 5% higher if the parent falls 12 weeks or more behind on their child support payments, or 55% or 65%.

With all that in mind, it’s important to remember that child support is treated more strictly in bankruptcy than other types of debts. Child support can’t be wiped away in a bankruptcy filing like credit cards or medical bills. There are also limitations to what the automatic stay can do about a child support wage garnishment. The automatic stay from a chapter 7 bankruptcy filing doesn’t stop a wage garnishment that originated from child support. Neither will filing for chapter 13 bankruptcy, if the plan doesn’t arrange for full repayment of domestic obligations. Only filing for chapter 13 bankruptcy with a plan to fully pay the debtor’s child support balance will halt a child support wage garnishment. However, not everyone will qualify for chapter 13 bankruptcy, as the debtor must have sufficient disposable monthly income to pay certain debts to qualify. Talk to a bankruptcy attorney about your situation to determine your eligibility for chapter 13 bankruptcy.

Options Besides Bankruptcy

If you have a wage garnishment pending or already in effect, you may have limited time and options to resolve this issue. You also may not qualify for your preferred chapter of bankruptcy, or have enough disposable income to fully pay a chapter 13 plan to resolve a child support wage garnishment. Some of your options to resolve a wage garnishment besides bankruptcy may include:

Pay the debt in full: this may involve taking on other debts
Debt scheduling: Arizona forbids most wage garnishments if the employee has already retained a qualified debt counseling organization at the time the writ is served.
Request a hearing on the wage garnishment: A debtor can challenge a writ of garnishment to either have it reduced or fully eliminated. A successful financial hardship motion may reduce a wage garnishment as low as 5%. The debtor can also challenge the validity of the judgment order, their employer’s cooperation with the motion, or show proof of their participation in a qualified debt scheduling program. This request should be brought within 10 days of receiving the Garnishee’s Answer.
Negotiate a settlement: Some creditors may be willing to negotiate an alternative pay arrangement besides a wage garnishment. A common example is when the IRS is garnishing an individual’s wages for back taxes. This would involve proposing an offer in compromise and complying with its terms. However, many creditors will be unwilling to negotiate such an agreement after obtaining a writ of garnishment.

Don’t Want Your Employer Involved in Your Debt Problems? Consider Starting Your Bankruptcy Journey Today

Even if the law protects you from workplace discrimination due to a wage garnishment, having your debt get to the point where your employer is notified about it can be humbling. If your creditor hasn’t yet obtained a writ to garnish your wages, filing for bankruptcy may be an option for you to stop collection efforts while you get your debt under control. Chapter 7 or chapter 13 bankruptcy may suit your debt relief needs and give you an opportunity to rebuild your credit after your case has been discharged. The key to a seamless bankruptcy filing is retaining high-quality legal representation. Pay for it with zero down flexible payment options meant to fit your budget. Schedule your free phone consultation with My AZ Lawyers today by calling 480-470-1504.