How to Protect your Income against Credit Card Company Wage Garnishment

This article outlines how credit card companies and junk debt buyers use the courts to garnish your wages to pay back a judgment against you, as well as, provide tips and strategies you can take to protect yourself from this occurring. Wage garnishment can be a financially devastating, so its very important to learn everything possible to protect you and your finally.


How Wage Garnishment Works?

Wage garnishment allows a debtor to take funds directly from your paycheck to pay back a debt. In order to garnish your wages, a creditor must first file a lawsuit and obtain a judgment. Most times, credit card companies are granted summary judgments because debtors never appeared in court to defend themselves. Don’t let this happen to you!

Once a creditor has a judgment, it can petition the court to move forward with sending wage garnishment documents to your employer. Your employer will have 7 days to comply with the garnishment order, and start withholding a portion of your paycheck to send directly to the credit card company until the debt is paid off. The amount of the garnishment is dictated by the state courts and federal law.


How do I protect my paycheck from garnishment?

The best way to protect your income from garnishment is to prevent a creditor from getting a judgment against you in the first place. You can achieve this by defending your lawsuit if you believe you do not owe funds, or the very old debt and possibly past the statue of limitations for collection. Settling with your creditor is another option Lastly, check federal and laws in the state where you live to see what type of income is exempt from garnishment.


Defend Lawsuit

If you receive a court summons regarding lawsuit due to a past credit card debt, you must defend it. If you stick your head in the sand, the credit card company will get a summary judgment, and may move forward with wage garnishment. Our website provides a great deal of information you can use to defend your credit card lawsuit. This includes information on how to answer your summons add use appropriate affirmative defenses. If you need comprehensive, step-by-step help than The Defendant Package would be good place to start.


Settle the Debt

Some credit card companies are more willing to settle the debt than undertaking a lengthy trial to garnish your wages. However, debt settlement or consent judgment may help you avoid a lawsuit and wage garnishment. This is how most credit card lawsuits are settled.

A debtor may enter into a settlement agreement with the creditor at any time prior to a final ruling. Under settlement agreement, the debtor may undertake to pay a certain sum of money if the creditor agrees to dismiss the case or negotiate for the judgment order (also called consent judgment).

Creditors usually prefer consent judgments because it maintains their right to use the additional collection methods if the debtor does not pay as per the agreement.


State Exemptions

Certain states, including Texas, Pennsylvania, North Carolina, and South Carolina, prohibit wage garnishment for debts owed to creditors. Besides this, some states also allow you to protect a portion of your wages. However, when you receive a wage garnishment notice, you should check the local laws to know if you can reduce the amount being garnished. If you are eligible for exemption, you may file a declaring in the court. With this said, it’s always a good idea to check your state rules if you receive a garnishment noticed.


Declare Exempt Income

There are certain incomes that are protected by garnishment by either state or federal laws. The following types of income listed are usually protected, and can not be taken to satisfy a credit card debt.

  • Social Security disability and retirement benefits (unless you owe child support or, federal student loans, or a federal tax debt)
  • SSI benefits
  • State Welfare benefits
  • State Disability benefits
  • Unemployment Compensation
  • VA benefits (with some exceptions for money you owe the government or for support)
  • Student Loans
  • Child Support you receive

If you have income from one or more of the sources listed above, you should notify the court. The best way to do this is to file a Declaration of Defendant Income and Assets Exempt from Garnishment. This is typically filed after a judgment but prior to any subsequent garnishment order.


Below is a template you use to creation your Exempt Declaration


Download (PDF, 279KB)




Protect Bank Account

With a judgment in hand, a credit card company or junk debt buyer may have the right to garnish your bank account! With that in mind, do not put any money a bank account if at all possible. Even though in most cases $500 in a bank account is exempt from garnishment if you have less than $1,500 in cash, the bank may freeze your account anyway if the creditor claims you actually have more than $1,500 total. This can result in a avalanche effect of bounced checks, overdraft fees, and other bank charges.

Note that most pensions are exempt from garnishment even after they are sent to you. But some are not. Avoid having pension checks direct deposited into a bank account, if possible.

This article touches on the steps you can take to protect your income and assets from garnishment. But what if it’s too late? How do you fight back against a credit card company that has already garnished your wages and back account? In the next articles,we will discuss actions you can take to protect your bank account and other assets once a garnishment order has already gone into effect.