How Wage Garnishment Works for Debt Collection in Wisconsin

What is a Wage Garnishment?

A wage garnishment happens when a court orders your employer to withhold some of your earnings to pay off a debt. What is your recourse if a creditor garnishes your wages in Wisconsin? The first step is to consult a Wisconsin wage garnishment attorney.

Creditors in Wisconsin may garnish wages for consumer debts, back taxes, unpaid child support, student loan debts, or payments ordered by a court judgment. Creditors may also garnish bonuses and overtime pay, and Wisconsin employers may charge you a service fee for each pay period.

Federal and state laws, however, limit how much of your earnings a creditor may garnish. In most cases, you have a right to be notified in writing and to request a hearing to verify the legitimacy of the garnishment and the amount being garnished by a creditor.

How Does Wage Garnishment Work?

Here is how wage garnishment typically works in Wisconsin. First, a creditor must obtain a court judgment against a debtor by filing a lawsuit. Then, the court determines if the debt is legitimate and, if so, how much the debtor owes.

However, not all creditors must obtain a court judgment before garnishing your wages. The IRS, local and state tax agencies, and the Department of Education are exceptions.

If the court grants a judgment, the creditor may request a court order for wage garnishment. You will receive a notification before a wage garnishment begins. That notification will tell you how much the creditor will garnish and how you may challenge the garnishment in court.

How Much Can a Creditor Take?

Federal law limits wage garnishments to twenty-five percent of your disposable earnings, but some states – including Wisconsin – have set a lower limit. In Wisconsin the limit is twenty percent of your disposable earnings. 

In Wisconsin, a creditor may garnish the lesser of twenty percent of your disposable earnings or the amount by which your disposable income surpasses thirty times the federal minimum wage. Disposable income is what remains after Social Security, state, and federal taxes are deducted.

A wage garnishment typically continues for thirteen weeks and can be renewed if the judgment debt remains unpaid. However, you can challenge a wage garnishment by asking a Wisconsin collections lawyer to file a “Chapter 128” petition to halt the garnishment. While the Chapter 128 is in effect you will still have to make monthly payments if your petition is approved.

What is Chapter 128?

Chapter 128 is a Wisconsin debt consolidation law that lets Wisconsin residents pay their debts over time without declaring bankruptcy. During the repayment period, creditors may not garnish your wages. Who is eligible to file a Chapter 128 petition?

1. You must be employed.
2. You cannot include debts (such as income taxes) owed to government entities.
3. You cannot include secured debt (like a car payment) without the creditor’s consent.

Chapter 128 is not bankruptcy and will not appear on your credit report as a bankruptcy. Filing a Chapter 128 petition can stop a wage garnishment, provided the paperwork is in order and submitted by your Wisconsin wage garnishment attorney.

When Should You Consider Bankruptcy?

If you do not qualify under Chapter 128, filing for bankruptcy is your last resort against a wage garnishment. Bankruptcy should be considered only if your attorney recommends it. Bankruptcy remains on your credit report for seven to ten years.

However, when you file for bankruptcy, a creditor can no longer garnish your wages. Bankruptcy courts issue an automatic stay that prevents a creditor from pursuing any debt collection activity during a bankruptcy.

Bankruptcy offers lawful, immediate protection from wage garnishment, creditor lawsuits, foreclosure, repossession, and harassment by debt collectors. If bankruptcy is your best option, a Wisconsin bankruptcy attorney will assist and guide you through the bankruptcy process.

What if Your Wages Are Garnished Without a Court Order?

The Internal Revenue Service (IRS), state and local tax agencies, and the Department of Education may garnish your wages without a court order. If one of these parties garnishes your wages, you can’t file a Chapter 128 petition.

Instead, you and your lawyer will take other steps to contest the wage garnishment. Adhering to your lawyer’s advice is essential. If the IRS seeks to garnish your wages, you will receive a written notification and an opportunity to claim exemptions.

If you default on a federal student loan, you will receive written notification thirty or more days before a garnishment begins. Use that time to prepare and file a written objection with your lawyer’s help.

What is Important to Remember About Wage Garnishments?

If you receive a written notification that a creditor intends to garnish your wages, it does not necessarily mean a wage garnishment will happen. Challenging a wage garnishment is not easy, but a Wisconsin collections lawyer may be able to stop a garnishment before it begins.

Creditors have the right to collect what you owe them, but you also have rights. If you receive notification that a creditor plans to garnish your wages, exercise those rights. Eventually, your debts can be settled, but that can’t happen until and unless you decide to take action.

If a creditor garnishes your wages or you have difficulty paying your debts, schedule your first legal consultation with a Wisconsin debt collection lawyer at West & Dunn as quickly as possible.

If Your Wages Are Garnished, West & Dunn Can Help

Wisconsin attorneys Shana Dunn and Travis West lead the legal team at West & Dunn. We use our considerable legal skills and knowledge to help clients across Wisconsin get out of debt, and we are ready to help you.

If you are notified that a creditor plans to garnish your wages, contact West & Dunn promptly. We explain your rights, discuss your options for settling your debts, and if necessary, help you file a Chapter 128 or a bankruptcy petition.

The attorneys at West & Dunn can help you in the most difficult debt circumstances. To learn more about challenging a wage garnishment and resolving your debts – or to begin the process now – schedule a consultation with West & Dunn by calling 608-975-3042.