In 2020, more than 4.5 million people across the United States had their wages garnished to pay debts. Wage garnishments are a common tactic creditors use to collect debts. In turn, they are also a common challenge that individuals already struggling with debt face.
We have discussed the important aspects of New Mexico’s laws regarding wage garnishments in previous blog posts. However, here are three additional – and essential – things you must understand about wage garnishments.
1. You can challenge garnishments
Wage garnishments do not begin until a creditor files a lawsuit and obtains a court order. You must receive notice of the lawsuit and the creditor’s intention to garnish the wages. Garnishments will not be a surprise, and you have the option to:
- Challenge the lawsuit or order, if you have grounds
- Negotiate with the creditor about a different payment plan
Understanding your rights in these situations is important.
2. Garnishments do not affect all your income
Under New Mexico law creditors can only garnish:
- 25% of your wages, or;
- The amount of disposable earnings exceeding 40% of the minimum wage.
It is also critical to note that not all sources of income can face garnishment. For example, if you receive federal disability benefits or VA benefits, these benefits cannot be garnished. This might change when the money is in your bank account, but garnishments cannot directly affect these benefits.
3. Filing bankruptcy can stop most garnishments
Usually, filing bankruptcy puts a stop to wage garnishments since the automatic stay stops creditors from collecting debts. This ends most wage garnishments, but not all of them. For example, if you fall behind on child support or alimony payments, garnishments for these debts will continue.
That does not mean bankruptcy is not an efficient option to help you get your debt under control. It can still prevent further garnishment and even erase some debts, to help you obtain a fresh start.