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Overwhelming debt affects every aspect of your life. You may have trouble eating and sleeping, or you may deal with your worries by eating too much and sleeping all the time. Certainly, your relationships may suffer if you allow the stress of your debt to make you irritable or affect your mood. Falling behind on your bills may be such a distraction that you have difficulty focusing at work. However, did you know that debt can also affect your pay?
The law allows your creditors to garnish your wages for unpaid debt. Garnishment means the court will order your employer to pay a percentage of your wages directly to your creditor. If your creditor is the IRS, you may have a very serious situation to deal with.
The power of the IRS
In order to obtain a wage garnishment, your creditors must obtain a court order to get permission to seize a portion of your wages to pay what you owe. The law allows creditors who have successfully obtained such an order to take up to 25 percent of your wages after taxes and Social Security deductions. You can see that a 25 percent reduction in your take-home pay can complicate your situation even further.
The IRS, on the other hand, does not need a court order. The agency is good about notifying taxpayers when they fall behind, and you may already have received letters demanding payment. Once the IRS sends a letter detailing its intent to garnish your wages, it may only be a few weeks before you notice a significant drop in your paycheck. The IRS has the authority to garnish up to 50 percent of your earnings before taxes and Social Security deductions.
What can I do to stop this?
The best plan of action is one that does not let the problem reach the point where the IRS is notifying you of wage garnishment. The IRS has many options for repayment plans, and you may qualify for one that will fit your budget and protect you from garnishment and levies. Some steps you can take include the following:
- Negotiating to have your debt balance reduced
- Seeking protections from the state of Missouri if the garnishment will jeopardize your quality of life
- Fighting the validity of the judgement against you
- Filing for Chapter 7 bankruptcy
Your attorney can examine your circumstances and advise you on the best option for your situation. With a legal advocate, you can ensure the protection of your rights and work toward the most positive outcome possible.