Knowing More About Wage Garnishments, IRS Levies and Legal Holds

Sometimes, people owe debts such as IRS back taxes, federal or local state taxes, back child support or even alimony from a spouse. In this scenario, the creditor obtains a court order to attach a portion of their wages to satisfy that debt. This is what we call garnishment and it varies from state to state and from situation to situation.

Nevertheless, this is done as a last resort. In many cases, other means of contacting the individual and resolving the issue have been attempted and been found fruitless. This is then where the creditor, faced with no other alternative, approaches the courts for help. The courts then determine that the defendant is unwilling to voluntarily settle the debt and thus is subject to a court order to garnish their wages.

There are many other occasions that may necessitate this. One is delinquent student loans which is more common than people care to imagine. Garnishment is as traumatizing as it is embarrassing and can wreak havoc especially in tough economic times like these.

The good news is that the law that governs garnishments also protects the debtor in many ways. This is because of the assumption that the creditor has a tendency to harass the debtor or to take more than is fair. That is why the Consumer Protection Act puts a stipulation that one's wages cannot be garnished beyond a certain percentage. The court also requests the debtor to fill out an income and expenditure assessment form which tells the court exactly how much to garnish. In most cases, no more than 25% of one's disposable income may be garnished unless it is in cases of bankruptcy.

It is also recommended that the debtor make an honest attempt to contact the creditor and try and work something out that does not involve the courts. This is an excellent way to avoid wage garnishment.

Fighting wage garnishments

Sometimes, the debtor may be able to fight off garnishment or legal holds in certain circumstances:

1. If he (debtor) can provide documentation showing that he or she has already settled the debt in full. 2. If the debtor can prove that there is already an agreement in place to pay the debt and the debtor has not defaulted on the agreement. 3. The amount of the debt is wrong. 4. The debt has already been discharged in a bankruptcy hearing.

Then there are also times when it is impossible to collect. These are:

1. When the entity owed is no longer in business or has ceased operations. 2. The death or permanent disability of the defendant or in this case the debtor.

As we have mentioned earlier, wage garnishments are only used when all other options have been exhausted. The creditor may have tried to contact the debtor to work out an agreement where he (debtor) can voluntarily pay the debt but may have failed to gain such an agreement. The creditor then turns to the courts.

The creditor must also prove that he or she has previous been unable to recover the debt using a voluntary agreement between him (or her) and the debtor

Learn the Truth About IRS Asset Seizure and Wage Garnishments

A garnishment is essentially a court order that orders the seizure of assets, usually monetary or liquid assets, from a person to pay off a debt. The most common of these is the automatic withholding of the debtor's wages or income. This also happens when a creditor fails to satisfy the debt taken, and goes to the court which can issue a judgment against him. This judgment is usually in the form of asset seizure.

Different states in the Union have different garnishment laws. In most circumstances, 25% of one's disposable earnings or assets can be garnished. This usually continues until the entire debt has been cured.

There are a number of situations that can lead to this unfortunate state of affairs. Among other things is failure to pay the IRS taxes owed, skipping out on child support or even some common bills. Again, what the creditor can do and the powers of the court in this situation vary from state to state and from situation to situation.

In the case of taxes, the state or the federal government becomes the creditor and can use the legal powers at its disposal to seize assets. This is accomplished through a process is known as wage garnishment. Most garnishments or asset seizures requires court orders. The courts work with the particular employers and are supposed to notify the creditor before any withholding of wages is done. In most cases, the garnishment is not the first option but the last one and is only exercised when all other options have been exhausted.

In many cases, garnishment occurs when the IRS sends communiques to the person and the person either ignores them or chooses not to respond. We recommend that you respond to every letter or phone call originating from the IRS because failure to do so can result in asset seizure. The IRS maintains very accurate records and can track the names, workplaces, banks and dwelling residences of anyone they are interested in.

Sometimes garnishment can come about due to unfortunate circumstances that are quite normal such as alimony to a separated spouse. These are quite common and form a sizable chunk of all annual garnishments.

Asset seizure can be very traumatic especially in tough economic times as the ones we are living in now. But the good news is that the powers to seize your assets is limited. The Consumer Credit Protection Act puts a cap on the amount of wages that can be taken from someone. The law allows the defendant to keep part of his income for living expenses. The IRS in particular allows one to fill out an income and expense assessment form that tells them how much you earn in a month and how much your total expenses are. The difference may then be garnished but not anything more. This law has one advantage and that is in limiting the extent of the powers wielded by the creditors against an individual.

How are the assets determined?

This is determined by the amount of disposable earnings of the employee who is subject to asset seizure. The court deducts the legal taxes for unemployment, social security and also insurance. Then the disposal income left, which is no more than 25% of the employees' disposable earning is subjected to garnishment.

The law allows up to 50% of the employees' disposable income to be seized in this manner. While there are restrictions on garnishment amount, these do not apply in case of court orders of outstanding federal debts and cases of bankruptcy. Whenever there is a conflict between federal law and state law regarding the amounts to be garnished, the smaller garnishment the smaller amount prevails.