What percentage of my wages can creditors take?

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Question:

I owe substantial balances to several credit card companies. One company has sued me already. If it wins, how much of my take-home pay can it get? And what about the other companies? I'm worried that I won't be left with enough money to pay for things like rent, food, and gas.

Answer:

How much your creditors can take from your wages is governed by state and federal law. Federal law places an outside limit on what can be taken -- but states are free to protect even more of your wages. (Learn about the wage garnishment limits in each of the 50 states.)

If your state doesn't offer more protection than does federal law, then the total amount your creditors can take from your wages is 25% of your net pay. That limit applies whether you have one creditor or many. Remember, however, that each creditor must have a judgment against you to be able to garnish your wages. If more than one creditor has a judgment, the first one would garnish your wages, get the 25% until the judgment is paid, and then cancel the garnishment. Then the second creditor would garnish 25% of your wages until that judgment was paid. And so on.

If your income is very low, the creditor may not be allowed to attach the full 25%

Before you lose a bunch of lawsuits, however, you might want to get some help dealing with your creditors. To find credit and debt counselors in your area, go to the website of the U.S. Trustee, www.usdoj.gov/ust, and select "Credit Counseling and Debtor Education." You'll find a list, by location, of counseling agencies that have been approved by the federal government to advise debtors who are considering filing for bankruptcy. Although you might not be in that position, these agencies have been examined and approved by the government, which makes it less likely that you'll run into some of the scam artists that all too often prey on people who are deeply in debt.

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