Avoiding the threat of garnishment in Tennessee

Although garnishment is an unpleasant process, it can be completely avoided with bankruptcy.

If you fall behind on your bills in Tennessee, creditors have several options to collect what you owe. One option is wage garnishment, which is an order from the court instructing your employer to hold a portion of your wages to be paid towards your delinquent debt. Since this is a potentially embarrassing situation, because your employer would be aware of your financial problems, you would likely like to avoid it. Fortunately, this is achievable.

How garnishment works in Tennessee

In most cases, your wages cannot be garnished out of the blue without your knowledge. Your creditor must first file a lawsuit against you for the debt owed. However, there are exceptions to this rule if you owe child support, student loans or income taxes. In these instances, your wages may be garnished without a lawsuit.

Once the lawsuit has been filed, the creditor must win it and obtain a judgment before proceeding further with garnishment. Having obtained the judgment, the creditor may then ask the court for a garnishment order and begin the process of getting your wages withheld.

Fortunately, in Tennessee, creditors are not permitted to take all of your paycheck, which would make it impossible for you to pay for other bills and necessities. Instead, the law limits the maximum amount that may be set aside from your paycheck to the larger of:

• 25 percent of your disposable weekly earnings-what is left over from your paycheck after taxes and other deductions have taken place; or

• The amount of your weekly paycheck exceeding 30 times the federal minimum wage

In addition to these limits, the law exempts $2.50 per week for each child that is a dependent. Also, if more than one creditor is garnishing your wages at the same time, the law limits the total amount may be garnished to 25 percent of your disposable weekly earnings, regardless of the number of creditors.

How to avoid garnishment

Once the lawsuit against you for the debt owed has concluded, you may still be able to avoid garnishment. In some cases, creditors are willing to forego the garnishment process, if you are willing to enter into a repayment arrangement with them. However, creditors are under no legal obligation to work out an arrangement with you.

If you are being garnished, an effective way to stop it is to file bankruptcy. Once you file bankruptcy, the automatic stay immediately halts all attempts to collect the debts you owe, including garnishment. Once you have completed bankruptcy, most of the debt that was the subject of the garnishment order is eliminated, giving you the opportunity to start anew with a clean financial slate.

Although bankruptcy is a powerful tool in avoiding garnishment, it may not be the best solution for you. If you are being hassled by creditors, it is important to involve an experienced bankruptcy attorney as early in the debt collection process as possible. An attorney can recommend the best debt relief solution for your unique circumstances.