In early July, two lawmakers proposed a bill that aims to put new limits on money that debt collectors can garnish from debtor’s pay and bank accounts. The proposal marked the first time in nearly 50 years that any such bill addressed the issue.
The bill revisits the Consumer Credit Protection Act, which was set in 1968. Named the Wage and Garnishment Equity (WAGE) Act of 2016, the bill outlines significantly reformed protections for debtors, effectively exempting more low-income workers from reduced wages due to garnishment. The bill also seeks to reduce the amount of money collectors can take from bank accounts as well.
Current federal law allows even those who live below the poverty line to have as much as a quarter of their post-tax wages garnished. There is also no limit regarding money taken from bank accounts, and collectors can essentially take an entire paycheck to cover the debt if it has already been deposited.
Representatives from the National Consumer Law Center hailed the legislation as an important, though overdue, step in correcting the inadequate protections provided to working families.
When Can Your Wages Be Garnished?
Typically, creditors are only able to garnish a certain amount of money from wages in order to settle a debt. These wage garnishment laws, sometimes referred to as wage attachments, state that creditors may not use wages to repay any debt that does not involve child support, taxes, alimony or student loans. This is particularly true in the state of Texas, where there are also state laws limiting protections for creditors.
Wage garnishment refers to situations where a court or other government agency sends an order to an employer, requiring your employer withhold a portion of your pay to send directly to the creditor.
A creditor may seek to garnish your wages if you have:
- Defaulted student loans
- Unpaid income taxes
- Court ordered alimony and/or child support
In these cases, any government agency or creditor is able to garnish your wages without receiving a prior court judgment. This may also affect the amount that is garnished as well, depending on the situation.
For many, the sudden garnishment of wages can pose additional struggles, especially in situations involving low income or additional financial burdens, like additional debt.
Tax Litigation in Texas
Are you, or someone you know, dealing with a federal tax-related case or dispute? If so, it is important that you contact a tax resolution attorney, who can evaluate your case as it stands compared to current federal law.
In Dallas and the surrounding communities in Texas, the attorneys at the Scammahorn Law Firm, P.C. specialize in handling federal tax-related issues, including those in need of representation during tax litigation. Our skilled attorneys can work with you to assess your tax debt position and reach a resolution that protects your interests now, as well as well into the future, with the minimum penalty possible.
We can help you today. You do not have to allow your assets to be garnished any further without seeking qualified legal advice. To schedule a preliminary consultation to discuss your case with our attorneys, we welcome your call to the Scammahorn Law Firm P.C. at (903) 595-1000.