How do wage garnishments work? Is the amount I owe on the debt just divided over a certain period of time? Are there extra interest penalties?
How do wage garnishments work? Is the amount I owe on the debt just divided over a certain period of time? Are there extra interest penalties?
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Answer: (1)
Wage garnishment is a legal procedure in which a person’s earning are required by court order to be withheld by an employer for the payment of a debt such as child support. The creditor can only take a specified amount from your paycheck. which is based upon a percentage of your disposable earnings. Federal law exempts from garnishment 75% of disposable earnings per week, or an amount up to thirty times the federal minimum hourly wage, whichever is greater. Some states still have wage garnishment laws in place; however, when the federal law provides a larger exemption than the state law, the federal law supersedes the state law. Your income can’t be garnished it if comes from Social Security benefits, retirement plan benefits or public assistance benefits.
The wage garnishment stays in effect until the debt is paid in full. If the wage garnishment is an order from the IRS, interest and penalties may apply. Penalties for failure to deposit, failure to file or failure to pay can double your original tax debt within a short period of time. Often, taxpayers can afford to pay the original amount of the tax debt, but are unable to pay the penalties and interest. You can seek legal counsel to request a Penalty or Interest Abatement.
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Posted by Staff Writer on 21 Jan 2010