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 judgement against him. This judgement us usually in the form of asset seizure.
Different states in the Union habe 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 seisures 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 sizeable 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 againsts 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 oustanding 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.
Irene James is a consultant who speciallizes in court orders and she recommends what to do in case you are subject to IRS garnishments or court levies
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