Join us as we sit down with bankruptcy attorney, Darin Wisehart, to talk through the options available to those who are facing wage garnishments. In this interview, Darin answers the following:
• What is a garnishment, and when can it happen to you?
• If there is a judgment is against you, can all of your personal property, including your wages, be subject to garnishment?
• When can your wages be garnished?
• How much of your wages can be garnished?
• Can you stop a garnishment before It starts?
• What is exempt from garnishment?
• What types of income are exempt from wage garnishments?
• Does filing a bankruptcy stop a garnishment?
If you would like to speak with one of our family law attorneys, please call our office at (503) 227-0200, or visit our website at https://www.landerholmlaw.com.
Disclaimer: Nothing in this communication is intended to provide legal advice nor does it constitute a client-attorney relationship, therefore you should not interpret the contents as such.
Welcome to Modern Family Matters, a podcast devoted to exploring family law topics that matter most to you. Covering a wide range of legal, personal, and family law matters, with expert analysis from skilled attorneys and professional guests, we hope that our podcast provides answers, clarity, and guidance towards a better tomorrow for you and your family. Here's your host, Steve Altishin.
Steve Altishin 0:31
Hi, everyone. I'm Steve Altishin, Director of Client Partnerships here at Pacific Cascade Family Law. Today, I'm here with Attorney Darin Wisehart to talk about garnishments, what they are, and what you can do if you get one. So, Darin, want to talk a little bit about today's topic before we head into the questions?
Darin Wisehart 0:51
Yeah, no problem. So my name is Darin Wisehart, and I'm here at Pacific Cascade working in primarily the bankruptcy department. And we're seeing a lot of bankruptcies uptick right now that have to do with garnishments. A lot of that's being driven by the idea that they couldn't garnish for a long time-- creditors couldn't. And so now that the COVID restrictions are starting to, you know, let go of that ability, the garnishments are really all over the place right now. So we want to be sure that we talk through what they are, how to look for them, what we can do about them, and just kind of the nuts and bolts of what a garnishment is.
Steve Altishin 1:28
I love it. And so with that, let's just do that. Let's let's kind of start right in with the obvious first question, what is a garnishment?
Darin Wisehart 1:39
Well, garnishment is when a creditor--so you know, we want to make sure we back up for a second and talk about judgments, because a garnishment is when a creditor has the ability to force you to pay them, primarily through wage garnishments, which is through your employer. There are other ways to do that, we don't want to get too far into the weeds on on the other methods, most people that I talk, to 90% of the people that that come to me and discuss this with me, we're talking about wage garnishments. A creditor has decided that you owe them money, which they have to go get a judgment. So then they now need to go to the court and say, hey, this person owes me money. And so it's already gone through that process, primarily assuming it's just a commercial creditor, or a civil creditor, which is your normal credit card, your normal medical debt, all of those comes through the judgment. Once the judgment is signed by the judge, then the creditor can then go and ask that person's employer to pay them a portion of their income to that creditor until that debt is paid off. And so that's your normal garnishment, that's kind of the skinny part of the judgments. There's a lot more to go on to judgments, but of course, you know, we want to get past that in this particular feed to make sure that we're talking about the garnishment aspect of it.
Steve Altishin 2:56
Right. Well wage garnishments, are they just for credit? Like I would call them a consumer creditor, or a Visa Bill kind of creditor, or can someone go after your wages for other kinds of stuff that you may owe?
Darin Wisehart 3:14
So garnishment can be a lot of different things. I mean, any real creditor for the most part has the ability to sink their teeth into wages. And it really is, it's a conversation that gets a little bit deeper once an attorney knows what the garnishment is for. And there's always a little more to talk about, especially because garnishments are--a major player in garnishments is state law. And so we want to be sure we know where the person is, and what type of Garnishment, who's garnishing, have a copy of that judgment or whatever that device was that was signed by the court that allows the person or the group or the company to garnish wages. So we have a whole host of the garnishments. I mean, we got taxes, we got, you know, spousal support, there's a lot of different sections of that, that can garnish.
Steve Altishin 4:05
So if I'm coming in, I think my first question to you would be, how much can they take?
Darin Wisehart 4:10
There's a golden question, right? We always want to know that because most creditors--so I mean, this is gonna vary a little bit state to state, it varies only a little bit, though. So the nice thing about this is once you know it for one state, it's going to be close in a lot of the states, you're going to see similarities in a lot of the rules, because they're based on, in large part, federal guidance on what they'd like to see. And there's a federal law that governs a little bit, but the state's kind of take over the garnishment statutes. In Oregon, we have a statute that says, for the bigger piece, for the one that most people come to me about which is credit card debt, medical debt, those collection companies that are now looking, they have their judgment in place. Now they're looking to then garnish and they can garnish about 25% of the wages. There's some fuzzy math that they put into that where It's supposed to be 25% of wages, subtracting this one little thing, but I always tell clients to look to about 25% of your wages, and just, you know, keep it simple, don't get caught in the weeds on some of these things.
Steve Altishin 5:13
Well, if there's a creditor who hits you up and is starting to get 25% of your wages, what happens if another creditor comes in with a judgment against you, can they garnish you too?
Darin Wisehart 5:27
They can try, they can certainly try. So they have to wait in line. And the beauty with these statutes, a lot of the states have the same type of statute, Oregon has a statute where if somebody is already garnishing you, say they garnish you last week, they start a garnishment, and they've kicked in now, they're first in order. And we always, when we look at statutes that deal with collection,and debt and all those kinds of things, the statutes always like to reward people that are on the ball. So if you're on the ball first, if you get there first in line, then you should be getting paid all of that 25%. And when that's in place, nobody else can garnish more than that 25%. And that means that they have to sit patiently and wait for that garnishment to expire, which it does expire, after 90 days, the company has to re up that garnishment in order to keep it going. And if they expire, and they lapse, then the other creditor can walk in and say hey, now it's my turn to get paid for a little bit. So you can have some splotchy, you know, a 90 day creditor garnishing and then maybe another creditor comes in and garnishes a little and you've got some money going to some and some to others. It's tough for people to track when there's multiples like that, but that's how it's supposed to work. They can only garnish the 25% because that's the category. And if somebody has already taken that full 25%, there's nothing left for that second, or third, or fourth creditor.
Steve Altishin 6:47
Got it. And to make it clear in my mind, it's not that the creditor comes to you and says pay me 25%, That goes straight to the employer, right?
Darin Wisehart 6:54
Correct. So when they file the garnishment order, or the writ of garnishment, they'll send it over to the employer and say, we demand--it's a court order-- we demand that the employer pay that 25% to us, if there's no reason why they shouldn't have to pay it, right? And so there's a little bit of a question there, and they send over a bunch of documents, and those documents are then supposed to be given to the individual who's going to be garnished, and they can read them through, and they've got really good information on there. In Oregon, there's some good data pages that you want to make sure you're not lazy with because it's going to tell you this is what's supposed to be garnished, these are the rules that you are supposed to play by, and it gives you a chance just on the ground without needing an attorney at that point, to figure out, are they doing what they need to do? Is there a defense? Is there a way that I might be able to have them not take the garnishment? You know, there's a few good paths for that, but it gives you a really good game plan. And this writ of Garnishment then demands that the employer takes that percentage of money out of your income, and they don't really get a choice on that. Because they'd be in violation of a court order if they don't do it. So it's not, you know, I have certain people who will call me, and they'll be angry at their employer, oh, my employer is given up 25% of my income, well, they don't have a choice. They're forced to do that. That's what the law requires. And if they don't do it, then that creditor, that company that needs to garnish, can go after the company then-- they can go after your employer and you really don't want that, right? That's not a good situation.
Steve Altishin 8:29
No! These are serious businesses, garnishments. I guess the next logical question I would come to is, can I stop this before it starts? I mean, you know, obviously,someone should at least have some kind of idea that this might be coming. What if someone comes in and says, Well, you know, how do I stop it? Or could I have stopped it before it even started?
Darin Wisehart 8:57
Yep, and this is the old quiet before the storm type of scenario where, if they get a judgment, I mean, there's some other conversations that we can have about judgments and what that means, what it can lean or tie to, houses and things like that--we're not going to talk too much about that here. But if they get the judgment in place, then for most people, it's relatively quiet still. And they don't have to worry as much about, oh, you know, I don't hear anything, and nobody's forcing me to pay, so out of sight, out of mind, right? Up until the point that the garnishment hits, and that's where the creditor has decided, hey, I'm not getting anything, there's no settlement happening. There's nothing there's no progress on this, I'm now going to pull money out of their paycheck. And then we also want to talk real quick to make sure that you know that most creditors, at least in my state in Oregon, they will they will also take all of the money out of your bank account up to the value of the debt. And so you want to be aware of that. That's just a little piece and we'll probably do another one of these on that because that's another action all together, but those two paths are your typical. So when they're to the point of garnishing now, they've already got their teeth sunk into you. And so now people call me Hey, can I settle this? Can I do what I need to do? And the answers to that, you know, it's complicated, because my statement is always looking at it from a creditor standpoint. And at that point, they're getting the garnishment, they're getting the 25% of your wages, there's no real reason for them to come to the table and negotiate with you, right? So that's a bit late in the game. The point of negotiation is when you get that first judgment, and that's a really good point that when I teach these classes, when I do things that I'm talking to people, I want to be sure that people understand that the second they get service of that judgment, that's when you need to talk to the attorney, because that's when you have the most doors open, you have the best ability to deal with these things head on, and then to tackle and potentially get them taken care of at that point, rather than letting them carry until you know, they get to this garnishment. And now, you're not going to be able to settle them for much less than maybe 70 or 80%. Because the creditors saying, Well, I'm getting money now, why would I want to settle with you?
Steve Altishin 11:14
Yeah, that again, makes sense. Not to stick your head in the sand on this kind of a thing. So, bankruptcy, obviously, people have a kind of a concept understanding of bankruptcy, at least a vague one. But how does bankruptcy and garnishment, how do they kind of fit together? And can bankruptcy even stop a garnishment?
Darin Wisehart 11:40
Absolutely. So bankruptcy is your path to force the creditor to stop the garnishment. And conceivably, you're supposed to be able to stop the garnishment the day that you get a case number. So you want to get you a conversation with the attorney, you want to have your office that you want to work with, you move forward, you get the documents prepped and ready, then you meet and you sign the documents to get filed. Once you have a case number, you can call the creditor and say, You shall stop, you will stop garnishing my wages. Now one of the kind of tricky parts about this is I usually say with garnishments it's like a big train, it takes a couple of days to stop. And sometimes payroll has already been submitted for a certain pay period. I always talk to clients about timing and making sure that we're trying to stop the train as soon as we can. But you know, you want to be sure that you're aware that it does take a little bit. So don't procrastinate, make sure you're working on it right away. But bankruptcy does stop the garnishment. Now that's what's called the automatic state. And the automatic state kicks in the day you file the case. So you get a case number, you're good. Now you will notice the payroll, there's a couple of procedures that I always have clients go through to get me information so that I can give payroll that direct notice to say, Hey, we've filed the bankruptcy, this is going to stop this writ of garnishment, it has no effect right now. So don't pay that money out anymore. And that'll make sure that the wheels of the train are slowing down. And they're getting to that good spot, which is money is no longer coming out of your paycheck. Now the question then is, what will happen to it then? And that's a question more of which path is the best path for bankruptcy? Is it a chapter seven, which is designed to kind of liquidate, and you don't have very many assets, you don't make too much money, and that's your path there. And the idea then is to maybe zero that money out, or your path is a chapter 13, where maybe you're making decent money, you just can't afford to pay that debt, or other debts. And maybe you have another reason to be in chapter 13. And then you'll need to pay a little bit, but you'll need to figure that out with your attorney to see what your path is on how you're going to deal with the debt. But the key is in the beginning--and the idea with bankruptcy is we're going to stop everything, and we're going to give this quiet period of time to kind of figure out what's here and what to do about things. And what do we qualify for, what can we do? And that's the bankruptcy design.
Steve Altishin 14:00
So I come to you, and ultimately a decision is made that filing a bankruptcy is the answer. You can kind of help them through this process, especially, it seems like, the notification of the creditor or your employer kind of stuff. That seems like a pretty critical time, and it's not something that I would say someone should, before they even come to you, try to kind of do if they don't really know what's going on.
Darin Wisehart 14:35
Yeah, I agree. And there are a lot of pieces, you can do a lot of reading on this topic. And I always tell clients for Chapter sevens, for your basic chapter seven, you can tackle that. A normal person can tackle it. But there's a lot of things that, when you do this for a living, there's a lot of things that you want to have in place and especially when you're talking about a garnishment. You don't want to wait a month to read up and to figure out what you're supposed to do. And that's why hiring that good Attorney, the one that really knows where they're at, what they're doing, how they're going to get you to that goal, which is stop the garnishment and then potentially deal with the debt down the road however best we can, that's an important thing to do, is get those ducks in a row as quickly as possible. Because the longer you go, obviously, the tighter your budget's going to be because the longer they're getting the garnishment. But then there's also another couple of rules that we'll talk about here in a second that have to do with getting some of that money back, potentially. And if you're waiting, if you're out there, you know, thinking I don't know if I want to do the bankruptcy, and you haven't talked to the attorney, then you might not know that you're losing an opportunity or you're closing a door, and you didn't know the door was open, but it's closed for you now. That's where you don't want to be.
Steve Altishin 15:47
Yeah. So that kind of leads to what I was going to ask is don't give up just because, Oh my God, I got a garnishment now, that's the end of the story, doesn't matter what I do, I've lost that money. So, you know, maybe I'll just wait and see what happens.' And there is a time after the garnishment coming to you, that's really important to see if you can get back some of it.
Darin Wisehart 16:17
Huge, huge neon sign on this one. It's the neon sign: '90 days before you file your case'. And that's your preference period, that's your period of time that you can conceivably have your attorney go and try to force that creditor to return the funds. So if you were garnished, you know, 1000 bucks a month for the last three months, then there's a potential that you can get that money back. And a lot of people come to me and they don't know about this. And they'll say, you know, to me that's just dead money, it's gone, it's in the past. And I say, Well, okay, let's talk then, let's make sure that we were talking. My goal is always to get you to the best spot as I can, as smoothly as possible. And part of that has to do with if I can help to pay my fees. If I can get you that money returned, whatever it goes toward doesn't matter. The idea of it is still your money as long as we can get a bankruptcy case filed, say we filed today, we look back 90 days, any money that was taken by a creditor, if it was over $600 has to be over 600 bucks. If it was $599, we don't get it. But if it was over 600 bucks, we can we can go ask them to throw it back to us. And we're pretty successful at getting that done. It's not 100%, because there are some smaller rules that we could go over that will allow a creditor every once in a while to keep the money. But most of the time we're successful. And we can always tell you if there's a chance that we're going to be able to knock it back. But the idea then is, let's take a look and see if we can get it back. Because that might make your path through bankruptcy smoother, especially if you have other debts that we're dealing with or other reasons to go through a bankruptcy. It might make it more attractive as an option to get through. Nobody ever looks at bankruptcy as your first option, but as an option to get you to the best possible spot down the road in the smoothest way. That's the goal. And part of that is, if we can get money back, why not?
Steve Altishin 18:12
Yeah, absolutely. It just makes sense to come talk with you. How would they do it? I mean, we're about out of time here, which that went really fast, but you know, how can someone get connected and talk to you? And what's that going to mean to them? Is there a fee, or how does that all work?
Darin Wisehart 18:37
So you'll just contact, you'll reach out to Pacific Cascade, and you'll just talk to the nice people that you talk to on the phone in the beginning and just say, I'd like to talk to somebody about bankruptcy-- easy enough. The roads then will divert to an intake team that are great people. And their job is to kind of ask the first little group of questions to make sure that you're in the right place and you have the right idea of where we need to be going. And they'll try to get me right on the horn. And my goal, in the perfect world, my goal is I'm sitting here waiting and I'm waiting to talk to you. Of course, it doesn't always work as cleanly as that, but we try to get you on as quickly as we can so we can answer these questions. The consultation is free. If we need to talk for longer than 30 minutes, I'm not worried about it at all, we need to talk through your whole situation. We need to figure out what we have, what assets, what income, all the different pieces of a potential case. And then we need to figure out what all of the options are. And I talk the three main options with everybody-- I talk no filing, I talk chapter seven, and I talk chapter 13. And those are kind of a wide view of all the different options that are available to pretty much anybody who calls, and we can talk through those and figure out which one's best. What are the positives and negatives and what are the potential costs with how we're going to get you to where we're going. And that's what I always tell people you know, if you can talk to somebody for free that knows what they're doing, don't hesitate, don't sit on your hands, make sure that you're making that call right away, because it's free. And I tell clients, if you come into my office and you think because I'm an attorney, I'm going to charge you, don't bring your wallet. Just don't bring any money. I can't charge if you don't have any money, but I'm not going to charge anyway. I never do.
Steve Altishin 20:16
I like it. I like it. Well, thank you so much today, this was really informative. It took a really kind of complex issue and scary issue and made it more understandable and in a sense, less scary and more of a motive to get proactive if something like that happens. So thank you very much, Darin, for being here today.
Darin Wisehart 20:41
Yeah, no problem, it was a joy. Thanks for having me.
Steve Altishin 20:43
Thank you. And everyone else, thank you for joining us today. Anyone with any further questions on today's topic, you can post it here. We can get you connected with Darin right away-- you can call in and we'll get you connected to Darin, but like he said, don't wait too long. And so with that, everybody, stay safe, safe, stay happy, stay well. We'll see you next time.
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