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Despite your best efforts, you have been unable to keep up with your debt. Perhaps the breaking point was when you completed your tax returns and discovered you owed the federal government a significant amount of money. You may be doing your best, working extra shifts or taking a second job, but you feel as if you are sinking deeper into your debt.
You probably know some of the consequences for falling behind on your debts. That’s what makes people anxious when they are delinquent. A debt collector can take many steps in an attempt to claim what you may owe, including filing a lawsuit, repossessing property you used as collateral or garnishing your wages. When it comes to delinquent taxes, the federal government has a little more leeway than most creditors.
What are your options?
Garnishment of your wages means your Missouri employer deducts a certain amount from your paycheck and sends it to your creditor before you even see it. A creditor who wants to go that route must first obtain permission from the court. Depending on the amount of money you make and the kind of debt you owe, your creditor may be limited to 25% of the wages you make after your regular tax and Social Security Deductions. However, federal tax debt is a different story.
The federal government does not need a court order to begin garnishing your wages. Additionally, the IRS can garnish your wages up to 50% of your net pay. Imagine the financial struggles you will face if the government makes this decision in your case. Fortunately, you have options for stopping the garnishment of your wages, for example:
- Explore some of the options the IRS offers for payment plans for income taxes.
- See if you qualify for an offer in compromise, which means lowering the amount you owe.
- Ask the court to set aside the judgement, which may apply only if you believe there were improprieties or mistakes made during the lawsuit.
- Quit your job, but this is a temporary fix that may exacerbate your financial crisis.
- File for bankruptcy, which will enact an automatic stay to suspend the garnishment of your wages in many cases.
Whichever path you choose, you would be wise to seek as much information about your options and the risks of each one. Although you may feel your situation is desperate, you do not want to take action that will complicate the problems you are dealing with. Reaching out to a legal professional for sound advice is a wise first move.