Alimony Payments and Wage Garnishment

Regarding wage garnishment for credit card debts, do court ordered alimony payments count as disposable income?

One Response to “Alimony Payments and Wage Garnishment”

  1. Jeff Jenkins

    You recently asked, “Regarding wage garnishment for credit card debts, to court-ordered alimony payments count as disposable income?”

    Wage Garnishment

    The amount a creditor can claim from your wages through a garnishment depends on the type of debt. In New Jersey, creditors are limited to 10% of your gross pay. Student loan debt may result in garnishment up to 15% while child support debt may run all the way up to 65% of your gross income, depending on your situation and how far behind you are in payments. Credit card debt falls into the state-law 10% category.

    When can a creditor garnish your wages?

    Some creditors, such as the federal government and child support claimants, can garnish your wages without filing a lawsuit. Credit card issuers, however, will have to file suit for collection, win, and get a court order in order to garnish your wages. If you’re sued and don’t respond, the creditor will win by default and can then get a garnishment order. You should always answer the suit, especially if you’re being sued by a collection agency and not the original creditor. You should ask the creditor to prove that you owe the money and that they own the debt – many creditors can’t do it.

    How much can they take?

    If they do win the suit and get a garnishment order, the order applies to your “disposable income.” That means the amount you take home after Social Security and taxes. Your living expenses don’t get factored in, and neither do any court-ordered payments. They’ll take 10% of your check after Social Security and taxes, period.

    How to Stop Garnishment

    You have a couple of options for stopping the process. First, you can repay the debt. For most people, that’s not an option. You can also consider filing bankruptcy. When you file, you get the protection of the automatic stay. The automatic stay stops all collection actions – collection suits, foreclosures, repossessions, and wage garnishments. As soon as you file, the garnishment has to stop.
    Filing bankruptcy is a major decision, but it can make a huge difference if you’re battling a mountain of debt. Your unsecured debt, such as credit card debt, will be discharged. You’ll have the time you need to get back on your feet.

    If you think bankruptcy may be a good option for you, speak to a bankruptcy attorney before you file. The bankruptcy process is complex and the last thing you want to do is file and have your case dismissed. A bankruptcy attorney can also help you decide if filing is the best option for you, or if some other debt management technique would better fit your needs.

    I hope this answers your question,

    Jeff Jenkins

    Reply

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