Wage Garnishment Clarification?

[Nightowl805]

I will be receiving a wage garnishment from California State FTB (It went to my last employment but nut the current yet) for the full 25%. I will eventually be garnished by the IRS and I imagine EDD. I am also currently being sued by Ford...happy days My only assets are my job and a used salvaged car. I also have child support for a couple more years.

Is the maximum combined for all entities 25% max?? I am trying to postpone BK for 3-4 years with hopes that I will be able to discharge some of my Tax debt also...this seems my only chance.

Assuming that 25% is my max, is that taken out after child support? Lastly, do I need to close my bank account and just go to a cash system to prevent a levy of any deposited money from my check after Garnishment??

Thanks to everyone

[dingdong]

In California the max is capped at 25% at one time.

A wage deduction order takes priority over subsequent wage deduction orders, wage assignments and federal and state tax liens and levies. Child support orders and spousal support orders, however, take priority over wage deduction orders, regardless of when they are entered.
Social Security benefits can never be garnished

[junker]

i believe social security can be garnished, by the govt, for irs,govt student loans, and possibly back child support, but only to amount that leaves you 750 bucks. they cant take that.

[junker]

Can You Garnish Social Security Benefits to Collect Child Support?
Sunday / June 24, 2007
Whether you can garnish Social Security benefits to collect child support depends on the kind of benefit being received.
Ordinarily, Social Security benefits cannot be garnished for any debt. But there is a limited exception that allows garnishment for child support purposes of one type of Social Security benefit, the old-age and disability benefit. Another kind of Social Security benefit - Supplemental Security Income ("SSI") - can't be garnished, even to collect child support.

There are two types of Social Security benefits. The first type consists of old-age and disability insurance benefits. This is what most people think of when they think of Social Security. The second type of Social Security benefit is SSI. SSI benefits are designed to help aged, blind, and disabled people who have little or no income. It provides cash to meet basic needs for food, clothing, and shelter.

Social Security benefits are funded by Social Security taxes. SSI, in contrast, is funded by general tax revenues. Social Security benefits are considered a substitute for income, while SSI is considered a supplement to income based on need.

Because of the different purposes of the two types of Social Security, and the different ways the two benefits are funded, Congress decided that Social Security benefits could be garnished for child support, but SSI cannot.

[treehugger1]

Once the IRS or state tax agencies roll up to being first in the queue, they will genearlly hold preference until paid in full. Once student loans roll into the queue, they will have a preference for 15% of the overall 25% garnishment.

Neither of these preferential garnishments are all that bad, as both taxes and student loans have to be paid. My understanding is that once the student loans roll up to the front of garnishment, they have preference until paid in full. This only leaves 10% for other creditors.

You would be surprised how many folks have wage garnishments for child support, alimony, back taxes, student loans, etc. Many could declare a BK 13 due to disposable income, but since student loans are left out of most BK 13 payment programs, many find a temporary better deal living through garnishment. The downside, is that in the meantime, other creditors, CA's, etc can get judgments. But, this might be no big deal if BK 7 is in your future.

[Nightowl805]

Clarification ??

I actually want to pay my child support first. Is it 25% plus child support or is is child support plus whatever percentage of the garnishment for a a total of 25%??

IE
Child support----10%
Garnishment-----15%
Total---------25%

or

Child Support----10%
Garnishment-----25%
Total----------35%

Thanks again

[dingdong]

It is capped at 25% total.

If your CS garnishment takes up the whole 25% everybody else ( creditors) wait in line.

Some people actual prefer the garnishment, especially when it comes to SL debt if the granishment is less than the SL payment and they are having a hard time making the payment, the garnishment is sometimes less than the payment.

So if your monthly take home is 4000.00 with a 10% garnishment ( not including exemptions so this is a hypothetical example) and the garnishment amount is 400.00, if your typical SL payment is say 560.00/mo, you are "saving" 160.00 in payments.

This doesn't reflect any added interest that may accrue, which means you may be just paying off interest every month and adding to your prinicple essentially , but it can be a short term "fix" when funds are tight.

I suppose it could work the same way for your CS payments, if they are taking the bulk of your 25% cap on garnishment, creditors won't really be getting anything as long as the garnishment for support is in place. So with a little fenagling ( sp?), you could essentially stop your creditors from getting any part of your wages if you had a garnshment for CS. Though they could levy a bank account I suppose, so keeping your accounts low, might be a priority. ( Live on cash)

[treehugger1]

Student Loans are garnished at 15% now-a-days. It is my understanding (as already stated) that the student loan garnishment route is not uncommon. Once you roll past approximately 270 days of default on student loans, the law allows 15% garnishment without a court order. However, prior to the garnishment, the collection costs can approach 25% of total outstanding loan amounts.

If you have 10% CS and 15% student loan, then there is nothing else left if you have no assets. In my case the student loans were a huge issue and I think I'd rather deal with them and run the risk of garnishment than have to pay out 40 - 60% in a BK 13 plan (I'm a high wage earner.)

The other nice thing about the student loans is that after you have paid 6-7 months (or so) you can have the loans rehabilitated and begin paying yourself. Although, why anyone would want to do this is beyond me. If you simply have them taken out of your paycheck through garnishment, then a payment is made every month.

I spoke to the holder of my student loans a few weeks ago. They wanted me to "re-consolidate," but I'm rolling up on 150 days delinquent, and simply told them to let it go to garnishment. The person I spoke with was flabbergasted I would want such a thing. I made it very clear what my plans were and they only call about every other week now.

[dingdong]

Try the William Ford direct consolidation loan , they have an income contingent payback plan , the payments are really low.

You are correct about collection fees, I have had 30,000 added to my SL for defaulting in collection fees. You DO NOT want to default on SL. WF will get you out of default in a few weeks, They have a payment calculator for different payment plans on their website so you can see what the payment would be under the different plans they offer.

[treehugger1]

What was your original balance? I am sitting at about $70K. If I had to file a BK 13 and rolled these into deferrment for 5 years at their 8.25% interest, I'd have another $25 - $30K in compounded interest. I've looked at the WF reconsolidation. My problem is that I would be struggling to pay student loans and survive 25% wage garnishment. If I look down the road five years, I might be better off letting the loans default at 270 days, seeing the collection costs of $18K, and having the 15% wage garnishment. I never would have thought I'd be thinking this way, but I'm old enough to not be worried about my credit. I have $250+K in exempt retirement benefits, and this is growing rapidly since I increased my contributions. In an emergency, I can take a loan against a TDI retirement savings program, and pay myself back. I have a VERY secure job. I don't really need any credit, and I've now survived almost three years without using any credit.

If I re-consolidate my SL's, I reset the clock to default. Does any of this make sense?

[dingdong]

I PM'd you.

[franken55406]

I am holding off on BK 7 since I am judgment proof for wage garnishment. I am unemployed, stopped paying the CC last October and the Mortgage/HOA in Feb.

Am resigned to get served, but with my credit report indicating non payment on my CC and mortgage for many months, I doubt it since I am a BK7 candidate. The reason I won't file yet is not having health insurance. You only get one chance every 9 or 10 years to file.

Two questions..

Since, I do not have a full time employment, can my Schwab One(checking and brokerage) and pay pal account be raided and or seized by the unsecured creditors? For caution, I drain my accounts before I deposit funds from family to live off.

If and when I gain full time employment, is the up to 25% garnishment rate off gross or net(minus fed/state taxes, 401k deductions)?

[treehugger1]

25% is generally off of net, after taxes and SS. Your contributions to a 401/403 do not count. Garnishment is before these "voluntary" contributions.

I don't think it is unreasonable to hold out for 3-5 years if you are judgment proof or can withstand the occasional wage garnishment. The point is to always be prepared for the worst-case scenario, and then react if necessary.