Facing wage garnishment in Arizona? You’re not alone.

According to a study conducted by Automatic Data Processing (ADP), more than 7% of Americans have had their earnings garnished by debt collectors. Losing part of your income is a terrifying prospect for many individuals and families, especially during the economic uncertainty of the coronavirus pandemic.

The most important thing to understand about wage garnishment is that you are not helpless to stop it. 

By educating yourself about Arizona wage garnishment statutes and consulting with a wage garnishment attorney, you can take control of your circumstances and turn your financial situation around. Learn more about how to stop wage garnishment in Arizona from the debt relief attorneys at Lerner and Rowe Law Group.

How Does Wage Garnishment Work in Arizona?

Wage garnishment is the name given to the legal proceedings in which an employer is required by court order to withhold a portion of an employee’s wages in order to pay back a debt. Wages may be garnished for debts including child support payments, unpaid income taxes, defaulted student loans, credit card debt, outstanding medical debt, etc. In addition to wages, commissions, bonuses, and retirement or pension income may also be subject to garnishment.

Creditor Secures a Money Judgment

Before most wage garnishments can be carried out, the creditor seeking repayment must first secure a money judgment. A money judgment is an order signed by a judicial representative which awards money from one party to the other; in this case, from the debtor to the creditor. 

The court itself will not garnish your wages after a money judgment has been secured. It is the responsibility of the debt collector (also referred to as the judgment creditor) to obtain the debtor’s physical address and employer information in order to actually carry out the wage garnishment if the debtor (also called the judgment debtor) does not voluntarily make payments.

Note: While many debts require a money judgment, child support, unpaid federal taxes, and student loan debt do not require court approval before your wages may be garnished.

Employer Receives a Garnishment Notice

After a judgment creditor secures a money judgment, the judgment debtor’s employer (also referred to as the garnishee) will receive a garnishment notice or order. Within a week of receiving the garnishment order, the garnishee must confirm receipt of the notice and began withholding wages accordingly.

Three important things to note about garnishees:

• Garnishees are required by law to carry out wage garnishments, so don’t try to negotiate with your employer to get them reduced or dismissed.
• An employer cannot retaliate or terminate you solely because a single wage garnishment has been issued against you. However, if two or more judgment creditors have secured money judgments, you can be lawfully terminated from your job.
• Employees may be able to challenge the garnishment, in which case the employer can send withheld wages directly to the court who ordered the wage garnishment until the dispute has been settled.

Up to 25% of Wages Are Garnished Until Debt is Repaid

Wage garnishment in Arizona is limited in accordance with the federal Consumer Credit Protection Act (CCPA). This means that garnishees may withhold no more than 25%* of your non-exempt disposable earnings to be paid to a single judgment creditor.
It’s important to understand what is meant by non-exempt disposable earnings, as this can significantly impact how much of your wages can actually be garnished:

Exempt earnings—those which can’t be garnished—include Social Security benefits, Supplemental Security Income (SSI), veteran’s benefits, student assistance, and Federal Emergency Management Agency (FEMA) disaster assistance.

Disposable earnings refer to the amount of your wages left after required tax deductions have been made, including federal taxes, state taxes, Social Security taxes, and Medicare taxes.

The amount of non-exempt disposable earnings will determine just how much money is withheld from your paycheck. Keep in mind that disposable earnings don’t take into account your monthly expenses for healthcare, housing, food, or transportation, or clothing. 

A judgment creditor can continue collecting up to 25% of your garnished wages until your debt has been repaid in full. Some judgment creditors will only garnish wages for a set period of time and may terminate the wage garnishment before the debt is totally repaid.

Generally speaking, if multiple judgment creditors have secured money judgments against you, the creditor whose judgment was approved first will have full rights to up to 25% wage garnishment and the second creditor will have to wait until the first debt is repaid to begin garnishing wages. Occasionally, judgment creditors may each garnish a portion of your wages, so long as the total wages being garnished do not exceed 25% between both parties.

*Wage garnishment in excess of 25% of your wages may be enacted for child support debts and arrears or federal taxes.

What Can I Do To Stop Wage Garnishment in Arizona?

Of course, the best way to stop your wages from being garnished is to make good faith attempts to pay down your debt. If you are unable to do so, you should at least be on the lookout for any documents sent your way regarding complaints, summons or judgments—these are clear signs that a money judgment and wage garnishment could be forthcoming. It may be tempting to ignore these notices if you are feeling overwhelmed, but doing so wastes valuable time you could spend getting the lawsuit reduced or dropped.

In short, don’t give up too quickly. There are options for stopping or reducing wage garnishment.

Method 1: Challenge the Wage Garnishment Lawsuit in Court

Once received, you’ll need to note all pertinent deadlines and complete a Request for Hearing on Garnishment form (Form 8 or  Form 11, depending on your reasons for contesting the garnishment). The form must be filed with the court clerk and served to the judgment creditor. 

 You may object to the proposed wage garnishment based on one of the following arguments:

• Wage garnishment would lead to undue financial hardship
• Your earnings have already been subject to garnishment and you have no additional earnings left to garnish
• The judgment creditor’s claim is invalid
• Your income is exempt, or you do not earn any income

After doing this, you will need to gather supporting documentation to prepare for a court hearing. It is advisable to consult an attorney if you plan on doing this. You should also prepare to be asked questions about your financial situation by the judge.

One possibility, if a judge determines that wage garnishment will in fact place undue financial hardship on you, is that the percentage of your wages garnished will be reduced to a more acceptable level. Depending on why you are contesting the writ in the first place, the lawsuit could also be dropped altogether.

Method 2: File For Bankruptcy

Filing for bankruptcy is the most flexible option when it comes to stopping wage garnishment, since it can be initiated before your creditor secures a money judgment or after your wages have already been subject to garnishment. 

The automatic stay that goes into effect once you file for bankruptcy immediately halts any further attempts by creditors to collect debt from you. This can cut down on harassing phone calls from creditors and stop wage garnishment in its tracks.

If you have over $10,000 in debt, multiple kinds of debt, few or no financial resources, outstanding judgments that can’t be set aside, or have lost a considerable sum in the past three months of wage garnishment in Arizona, bankruptcy may be a viable option.

There are two main types of bankruptcy: Chapter 7 bankruptcy and Chapter 13 bankruptcy. Both chapters offer different benefits. In a Chapter 7 bankruptcy, you may be able to have many of your debts discharged but lose some of your assets. A Chapter 13 bankruptcy can be useful if you have the means to complete a restructured payment plan since you’ll likely be able to retain your home and vehicle.

Where Can I Get Help Stopping Wage Garnishment?

If you have been notified that your wages will soon be garnished, it is important to act quickly and prudently to protect your current income and your financial future. If wage garnishment is on the horizon, or has already begun, a solid first step is to confer with a wage garnishment or bankruptcy lawyer who can review your case and lay out all your legal options.

At Lerner and Rowe Law Group, we offer free, no obligation consultations to all prospective clients. Our experienced legal team is well-versed in matters of wage garnishment and bankruptcy and will review the details of your case at no cost. 

You can schedule your free consultation today by calling us at 602-667-7777 (Phoenix) or 520-620-6200 (Tucson). Our bankruptcy attorneys are available to assist clients throughout Arizona, including those in Mesa, Scottsdale, Glendale, and beyond. 

Have questions? Get connected with a representative online using our LiveChat feature, or send us a message using this convenient form. Concerned about the cost? Find out more about filing a zero down bankruptcy and check out our affordable payment plans.

The information on this blog is for general information purposes only. Nothing herein should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.

Spring cleaning is usually associated with thoroughly organizing and cleaning your house—but if your finances are less than sparkling, it might be time to take a closer look at your debt while you’re at it.

If you’re struggling just to pay your monthly bills, your financial goals may seem out of reach. Whether you’re behind on your car payments, your mortgage, or credit card bills, the stress of large amounts of debt can be debilitating. Throw in harrassing calls from creditors, and you may not want to get out of bed, let alone spring clean anything.

If you’re on the verge of losing your home or car, you should know that you have options to avoid repossession. Although filing bankruptcy in Arizona may seem intimidating, an experienced Phoenix or Tucson bankruptcy lawyer can guide you through the process and help you get the fresh start you’ve been looking for. 

How Filing Bankruptcy in Arizona Can Help

Bankruptcy allows you to either eliminate or consolidate significant amounts of debt related to car payments, home loans, medical bills, credit cards, personal loans, and more. Dischargeable debt refers to types of unsecured debt that can usually be reduced or eliminated completely in a bankruptcy. 

Although secured debts (such as a mortgage or car loan) may not always be dischargeable, many times they can be restructured into more affordable monthly payments.

There are two types of personal bankruptcy you can file in Arizona: Chapter 7 and Chapter 13. Choosing which bankruptcy type to file comes down to your individual circumstances and your financial priorities—that is, whether it’s more important to you to get rid of the most debt or keep as many of your assets as possible.

Chapter 7 Bankruptcy

A Chapter 7 bankruptcy is generally best for anyone with large amounts of unsecured debt and low income, although it may result in the liquidation of assets to pay creditors.

You may be able to retain certain assets such as your home or vehicle by utilizing Arizona’s homestead and motor vehicle exemptions. A bankruptcy attorney can help you protect your assets while discharging the most debt possible when filing bankruptcy in Arizona.

Chapter 13 Bankruptcy

A Chapter 13 bankruptcy aims to restructure your debt into affordable monthly payments over a three to five years period to a bankruptcy trustee. It can also help you catch up on missed or late mortgage payments to prevent a home foreclosure or even strip a 2nd mortgage from your home. 

Additionally, most Chapter 13 bankruptcies require very little repayment to unsecured creditors such as credit card companies. 

Is bankruptcy right for you? Find out now.

Tips to Keep Your Finances Spotless This Spring

While filing bankruptcy in Arizona can be a powerful tool, it may not always be the most strategic choice for you. Consulting with a bankruptcy attorney is a great first step towards understanding your financial options and making an informed decision. 

In the meantime, here are some great tips to keep your finances spotless this spring.

Determine Your Financial Goals

As you take stock of your finances, the most important thing to keep in mind is what your short-term and long-term financial goals are. If you have more debt than you’re comfortable with, make paying down your debt your primary focus. 

If you’re worried about saving for retirement, maybe it’s time to look at retirement accounts and investing options. Decide what’s important to you before you make any big financial decisions.

Create (Or Evaluate) Your Budget

Creating a realistic budget is crucial to being able to manage your money effectively. If you don’t have a budget (or it’s been a while since you updated it), take some time to go through your income and expenses over the last few months. 

Determine where you can curb your spending and devise or revise a budget that’s both reasonable and in line with your goals.

Organize Your Financial Documents

If you do decide that filing bankruptcy in Arizona is right for you, getting your financial documents organized is crucial. When you file bankruptcy, you’ll need all the proper paperwork and documentation to support your case. 

Shred outdated documents you no longer need, and make digital copies of as many documents as possible. This will make it easier to have everything you need at your fingertips. Additionally. make sure you securely store digital documents that contain sensitive information. 

Take Control of Your Financial Future

Filing bankruptcy in Arizona is a big decision, and one that shouldn’t be made lightly. For solid legal advice regarding your bankruptcy case, contact the qualified Arizona bankruptcy attorneys at Lerner and Rowe Law Group, where we’ve helped hundreds of clients just like you get the financial fresh start they needed. 

Speak with one of our bankruptcy professionals today by calling one of the numbers listed below. You can also chat with a live representative online now, or submit the details of your case using our secure and confidential contact form.

The information on this blog is for general information purposes only. Nothing herein should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.