Imagine looking up your bank account on payday only to discover that you received 25 percent less than your last paycheck. This is what wage garnishment can look like in Florida.
Wages can be garnished for a number of reasons. A defaulted loan is one of the most common. Unfortunately, despite their best efforts, many Orlando residents become overwhelmed by debts and cannot keep up with all their payments. When a creditor has not gotten a loan payment in a certain length of time, they will put the loan into default. This means the creditor will start collection efforts against you or sell the debt to a debt collection agency. Either of them could sue you to ask the court for an order to garnish your wages. This means your employer must withhold a portion of your earnings and send it to the creditor. In some cases, such as federal student loans in default, the creditor does not even need a court order to start garnishing your wages.
Can they take my whole paycheck?
Florida law limits how much of your salary a creditor can garnish to 25 percent of your disposable income or the amount by which your income exceeds 30 times the federal minimum wage of $7.25 per hour, whichever is less. Still, most of us would struggle to afford losing a quarter of our paychecks or even a lesser percentage.
Putting a halt to garnishment
Fortunately, there is an alternative to paying off your debts this way. Filing for Chapter 7 or Chapter 13 bankruptcy puts an automatic stay — essentially, a pause — on all garnishments and related litigation. The stay lasts as long as your bankruptcy case does. So, if you follow bankruptcy to completion, any existing or pending garnishment orders would become moot. You would receive the entire amount you earned during bankruptcy and afterward.
This is just one of the benefits of filing for consumer bankruptcy protection, but bankruptcy is not appropriate for every family struggling with debt. Talk with a bankruptcy attorney to learn what your options are.