Can Credit Cards Garnish Wages? What You Need to Know

You might be facing unpaid credit card bills right now. The thought of wage garnishment probably keeps you up at night. Here’s what you need to know about credit card wage garnishment and how to protect yourself.

Stopping credit card payments seems like an easy solution. It’s actually the worst choice you can make. Your debt grows larger with mounting interest and late fees. Eventually, your account gets sent to collections. Debt collectors start calling. If they sue you and win, they can garnish your wages.

Understanding the Wage Garnishment Process

Wage garnishment happens at the end of a long process. You miss several payments first. Your creditor sends reminders at 30, 60, and 90 days. A final notice arrives at the 180-day mark.

Your account then goes to a debt collector. Your credit score drops significantly. Late fees pile up. Your interest rate likely increases too.

Debt collectors have limited time to collect your debt. Each state sets its own statute of limitations. Expect frequent phone calls during this period. If collection efforts fail, you’ll receive a summons and complaint. Our partner Solo can help you respond to these lawsuits properly.

Ignoring the lawsuit guarantees you’ll lose. Fighting and losing also leads to wage garnishment. The court issues an order allowing the collector to take money from your paychecks.

How Wage Garnishment Actually Works

Once ordered, a portion of each paycheck goes directly to the debt collector. Your employer handles the transfer. They continue sending money until your debt is paid in full.

Your employer will know about the garnishment. The Consumer Credit Protection Act prevents them from firing you for one garnishment. Multiple garnishment orders put your job at risk.

Federal Limits on Wage Garnishment

Federal law caps how much creditors can take. They can’t garnish more than 25% of your after-tax income. They also can’t take more than your income exceeding 30 times the federal minimum wage.

The current federal minimum wage is $7.25 per hour. Creditors must use whichever limit is lower. Some people earn too little to have their wages garnished at all.

Many states impose stricter limits than federal law. Check your state’s specific wage garnishment rules. You might have stronger protections than you think.

Bankruptcy Stops Wage Garnishment

Filing bankruptcy creates an automatic stay. Creditors and debt collectors must stop garnishing your wages immediately. The protection continues after your bankruptcy concludes.

You may need to notify your creditors and employer separately. Sometimes the court system needs direct notification to stop an active garnishment. Speaking with a bankruptcy attorney for free can clarify these steps.

Strategies to Avoid Wage Garnishment

Making minimum monthly payments keeps your account current. Most credit cards require about 10% of your balance. Paying this amount prevents collections and garnishment.

Minimum payments don’t solve your debt problem, though. You’ll sink deeper into debt over time. Interest continues accumulating on the remaining balance.

Contact your creditor immediately if you can’t make minimum payments. Ask about hardship programs. Many creditors offer temporary relief options. They might reduce your interest rate or lower your monthly payment.

Credit Card Companies Can Take Your Wages

Credit card issuers can garnish wages in most states. The process takes time to unfold. Your debt goes to collections first. The collection agency then sues you for non-payment.

You lose automatically if you ignore the lawsuit. Even fighting and losing leads to garnishment. The court grants the collector authority to take your wages. Some collectors pursue non-wage garnishment instead. They take money directly from your bank account.

Fighting Unjust Garnishments

You can challenge improper garnishments through legal action. Filing a motion to vacate works when you never received lawsuit notice. Courts sometimes set aside judgments in these situations.

Some income types are completely protected from garnishment. Social Security benefits typically can’t be garnished for credit card debt. Very few people qualify as truly judgment-proof. Most consumers have at least some income that’s vulnerable.

Take Action Before Garnishment Starts

You have options when facing credit card debt lawsuits. Responding to the lawsuit protects your rights. Our partner Solo helps you file proper responses quickly. Acting fast prevents automatic judgments against you.

Review your state’s garnishment laws carefully. Know your rights and protections. Seek help early rather than waiting for garnishment orders. Professional guidance makes navigating debt collection lawsuits much easier.