When will the creditor stop garnishing my wages?

If a creditor is garnishing your wages to pay off a money judgment, tax debt, or student loan obligation, you probably want to know when the wage garnishment will end. The wage garnishment will stop when you:

• pay off the debt
• settle the debt
• discharge the debt in Chapter 7 bankruptcy
• pay some or all of the debt through a Chapter 13 repayment plan, or
• successfully ask the state court to stop the garnishment.

How to Stop the Wage Garnishment When You Can't Pay

Federal law and each state's law afford you several options to stop a creditor from garnishing your wages.

File a Claim of Exemption

In certain circumstances, states allow you to protect some of your wages with laws called "exemptions." By filing a claim of exemption with the state court, you're asking the court to totally or partially stop the creditor's garnishment of your wages.

File for Bankruptcy

Filing for bankruptcy immediately stops most types of wage garnishments, at least temporarily, because of the automatic stay order that's put in place when you file. Chapter 7 and 13 each offer different ways to take care of the debt.

• Chapter 7 bankruptcy. Many debts can be wiped out in three to four months, such as credit card balances, medical bills, and personal loans. You'll need to qualify by passing the bankruptcy means test.
• Chapter 13 bankruptcy. Not all debts can be discharged in bankruptcy. For instance, many tax debts and all support arrearages will remain your responsibility. If you don't want the garnishment to go through your employer, you can repay nondischargeable debts by setting up a payment plan through Chapter 13 bankruptcy.

Other Options for Tax and Student Loan Debt

One of the difficult things about owing taxes and student loan debt is that the creditor doesn't need to get a judgment before garnishing your wages, and it's difficult to get rid of these debts in bankruptcy. Fortunately, procedures exist for negotiating tax debt with the IRS, and there are ways to challenge a student loan wage garnishment.

Pay the Debt and Stop the Garnishment

Sometimes it makes sense to pay off what you owe. Here are two options.

Settling the Debt

Many creditors would prefer to receive a smaller amount in a one-time lump sum payment as opposed to the full amount paid in smaller, periodic payments over time. For that reason, the creditor might agree to settle the debt for less than the amount you owe. If you can get some cash to settle the debt, the garnishment will end.

Paying the Garnishment

If the creditor proceeds with the garnishment (that is, you don't settle the debt or stop it some other way), the creditor will reduce your total balance by the amount of money taken from each paycheck.

Also, for many types of debts, you'll have to pay interest. For example, if the garnishment is due to a money judgment, often you must pay 2% to 18% interest on top of the principal balance, depending on your state's laws. A significant interest rate will make the underlying debt that much more difficult to pay off.

Ideally, you'll be able to pay off the total balance in a relatively short amount of time without too much financial hardship on your part. Unfortunately, this is rarely the case. A sizeable principal balance combined with a substantial interest rate means that you might find it hard to pay off the balance without significant financial difficulty.