Wage Garnishments and Bankruptcy in Mount Vernon

Skagit County, Washington, is known for its great beauty and diverse landscapes, including the Cascade Mountains. With all this grandiose magnificence surrounding its residents, you would think they would have nothing to worry about. Unfortunately, this isn’t the case. Just like anywhere else in the world, residents of this great county are still plagued by financial issues that beg for their attention.

Both wage garnishments and bankruptcy are complex legal issues that many people may face when they find they can’t meet their financial obligations. In Mount Vernon, Skagit County, Washington, understanding the relationship between wage garnishments and bankruptcy is essential for those experiencing financial distress.

Consider the value a Mount Vernon bankruptcy attorney can bring to your situation. With decades of experience, they can guide you through the ups and downs of the process and ensure everything goes smoothly.

What Is Wage Garnishment?

First, we want to make sure you understand what wage garnishment is and how it can truly affect you. It is a legal procedure in which an employer withholds a portion of one’s earnings to pay off a debt. This garnishment, typically ordered by Skagit County court following a judgment in favor of a creditor, ensures that the debtor pays a portion of their debt directly from their wages.

Wage garnishments can come across your paycheck for different kinds of debts, including credit card debt, medical bills, personal loans, and unpaid taxes. To protect a debtor’s income, Washington state’s garnishment process is governed by specific rules.

How Wage Garnishments Work

1. Court Order: A creditor may request a court order to garnish your wages after they sue and obtain a judgment against you.
2. Employer’s Role: The employer must comply with the garnishment order they receive. In doing so, they withhold a percentage of your paycheck and send it directly to the creditor or the court.
3. Garnishment Limits: Under Washington law, the amount that can be garnished is limited to 25% of your disposable earnings (the amount remaining after deductions have been made for taxes, social security, etc.) or the amount in which your weekly wages exceed 30 times the federal minimum wage, whichever is less.

For example, your disposable income is approximately $500 per week. In that case, 25% of $500 is $125. Thirty times the federal minimum wage is $217.50. So the garnishment amount would be $125 because it is the lesser of the two amounts.

Bankruptcy and Its Impact on Wage Garnishments

Bankruptcy is a way to seek relief from overwhelming debt and either eliminate or restructure financial obligations. There are different types of bankruptcy, but Chapter 7 and Chapter 13 are the most relevant for individuals.

Chapter 7 Bankruptcy, also known as liquidation bankruptcy, allows you to remove most unsecured debts, such as medical bills and credit card balances. On the other hand, Chapter 13 reorganizes your debt into a manageable repayment plan over three to five years. This lets you keep your assets that might be otherwise liquidated in a Chapter 7 case.

One key benefit of filing for bankruptcy is an automatic stay, which temporarily stops most collection actions, including wage garnishments, as discussed under RCW 6.27.

Automatic Stays and Wage Garnishments

The automatic stay immediately stops any ongoing wage garnishments that may be in place. This stay can provide great relief while allowing you to catch your breath and reorganize your financial affairs without the added pressure of wage deductions.

However, you also must remember that the automatic stay doesn’t apply in all cases, especially if the situation involves child support, spousal maintenance, or certain tax obligations.

When the Automatic Stay Applies to Wage Garnishments

• Personal Debt: The automatic stay will stop the garnishment once you file for bankruptcy if your wage garnishment is for credit card debt, medical bills, or other consumer debt.
• Student Loans: While federal student loans aren’t subject to garnishment if you file for bankruptcy, the automatic stay doesn’t discharge these debts. You would need to address the student loan repayments separately.
• Tax Debts: The automatic stay can temporarily stop IRS garnishments but may not discharge the tax debt. You would need to negotiate a repayment plan for the debt with the IRS.

It is important to follow all the proper steps when filing for bankruptcy to help ensure that the automatic stay is in effect and that all the garnishments are stopped. If you continue to get garnished despite filing, you must notify the Skagit County bankruptcy court or your attorney for more assistance.

Can Wage Garnishment Be Stopped in Washington State?

Yes, wage garnishment can be stopped under certain circumstances. These include when the debt is paid in full, you file a claim of exemption if the garnishment causes financial hardship, or you file for bankruptcy, which triggers the automatic stay and temporarily stops the garnishment.

Filing a Claim of Exemption to Stop Garnishment

To file a claim of exemption in Washington state, you must fill out a Claim of Exemption form and submit it to Skagit County Court. You must also be able to provide evidence that the garnishment imposes an undue financial hardship. If approved, the court can then reduce or eliminate the garnishment.

Can Multiple Wage Garnishments Happen at the Same Time?

Washington state law limits garnishments to just one at a time, which applies to most debt. However, there are still exceptions for some circumstances, like child support, spousal maintenance, and federal tax debts. While you might find multiple garnishments in these cases, the garnished amount still can’t exceed the statutory limits.

The Statute of Limitations for Wage Garnishments in Washington State

Creditors in Washington have 10 years to enforce a judgment through wage garnishment. They may also renew the judgment for another 10 years to extend the timeframe for the garnishment.

This is the general statute of limitations for judgments in Washington state as described under RCW 4.16.020(1). With that said, there are other things to keep in mind:

• Six-Year Statute: Certain debts, like written contracts (e.g., credit cards, loans), fall under Washington's six-year statute of limitations for filing a lawsuit to obtain a judgment (RCW 4.16.040). However, once a creditor obtains a judgment, the enforcement period becomes ten years instead of six.
• Federal Student Loans: Instead of state statutes, federal laws govern student loans, which have no statute of limitations for garnishment.

Initial Judgment Period

Once the creditor obtains the judgment against you, the 10-year timeframe begins from the date of that judgment to enforce it through garnishment or other collection efforts. They can garnish your wages, seize bank accounts, or pursue other remedies as allowed under Washington law.

Renewal of Judgments

If the debt remains unpaid after the 10-year timeframe, the creditors can apply to Skagit County Court to renew the judgment for an additional 10 years. There isn’t a limit on how many times a judgment can be renewed in Washington, allowing creditors to pursue collections indefinitely if they follow all the legal procedures for renewals.

For example, let’s say there was a judgment entered against you in 2014. The creditor will need to file for renewal by 2024 to continue to enforce it. If renewed, collection efforts will continue until 2034, when they can again file for another renewal. This can leave your wage in garnishment for decades.

Statute of Limitations for Filing the Initial Lawsuit

The statute of limitations for filing these lawsuits depends on the type of debt. Written contracts for loans and credit cards, revolving credit lines, and open accounts have a six-year statute of limitations. Judgments obtained in other states have a timeframe of 10 years but the creditor needs to domesticate the judgment in Washington to enforce it.

Practical Considerations for Debtors

Here are some considerations to keep in mind if you owe money and have received a garnishment notice:

• Track Judgment Expiry Dates: If there is a judgment against you already, be sure to keep records of the original date and check if it has been renewed.
• Monitor Garnishment Notices: Make sure any garnishment notice you receive is tied to a valid and active judgment.
• Challenge Expired Judgments: If a creditor attempts to garnish your wages based on an expired judgment, you can raise the statute of limitations as a defense in court proceedings.

Federal vs State Judgments

Wage garnishment laws in Washington state primarily focus on judgments issued within the state. However, there are some instances when federal or out-of-state judgments come into the picture. These special cases often have different timelines and different enforcement rules and implications.

To illustrate, federal judgments have a longer enforcement period of 20 years under federal law, with the possibility of renewal. State judgments, on the other hand, are governed by Washington’s 10-year period, with renewals as we described.

How a Mount Vernon Attorney Can Help With Wage Garnishment

Dealing with wage garnishment can be overwhelming, especially when your financial stability is on shaky ground. A skilled attorney in Mount Vernon, Washington, can provide invaluable assistance at every stage of the process.

For starters, they can review the validity of the garnishment and ensure it complies with Washington state laws. Any errors in the process, like expired judgments or incorrect calculations, can sometimes render the garnishment invalid.

Your Washington attorney can also file a claim of exemption if the garnishment causes undue financial hardship and negotiate with creditors on your behalf.

So, whether you are facing a wage garnishment now or want to prevent one from happening, consulting with a Mount Vernon attorney is a good first step toward taking back control of your finances.

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