How to Avoid Wage Garnishment
Wage garnishment is the process of deducting money from someones paycheck in order to satisfy debts, credit card debt, back taxes, or child support payments. Wage garnishment must be authorized by a court. Notices are sent to the individual whose wages will be deducted and to their employer. If possible, it is definitely beneficial to avoid wage garnishment because a history of wage garnishment scares off future and potential creditors.
If you are having trouble keeping up with debt payments, follow these 5 steps to avoiding wage garnishment.
5 Steps to Avoiding Wage Garnishment
1. One of the keys to getting out of financial trouble is understanding exactly how much you owe and who you owe it to. List all your creditors and bills, how much you owe each, what day in the month the bill is due and a total amount you have to pay for all your bills. Knowing the total amount allows you to set that amount apart from your paycheck before you start spending it.
2. Know who owns your debt. Mortgages and student loan debts are often sold to third party companies and investors. By contacting your original creditor you can follow the chain and find out who currently owns your debt. If you are behind on your payments on several debts, prioritize them. Ask your creditors about grace periods. If you owe money to the government make a point of paying these debts off first.
3. Negotiate payment plans with your creditors. Wage garnishment and lawsuits are more effort than they really want to put forth. And getting some money from you over a longer period time is definitely more appealing to them than getting no money from you at all. Banks, credit card companies and the IRS are surprisingly willing to negotiate a new payment plan. For example, the IRS offers the Offer in Compromise plan. If you owe money in back taxes to the IRS certainly look into the Offer in Compromise.
4. Be as honest with your creditors. The more information you give them about your financial situation, the better chance you have of negotiating a payment plan that will work for you. Its almost human nature to avoid contact with people you owe money to, but in the case of creditors the more open and honest you can better chances you have of getting more time and better options. Creditors are people too, and communicating with them will surely benefit you more than ignoring their attempts to reach you. If you talk with them honestly and often you will certainly improve your chances of avoiding wage garnishment.
5. Obviously keeping to your new payment plan agreements is crucial to avoiding having your wages garnished. If you can see that you will start falling behind on payments, let your creditors know.
If you are facing wage garnishment, taking these steps to avoid it will not only get the creditors off your back, it will be the first step in taking control of your financial situation and turning your finances around. Being in debt is stressful, take these steps and start putting together a plan to get that weight off your shoulders.