The term wage garnishment is generally reserved for the IRS process of forcing an employer to withhold a certain portion of wages to meet some back taxes. This is usually accomplished through a court order that is served on the debtor’s human resources / payroll department instructing them to withhold such wages. This can only be done legally after the creditor has filed a lawsuit against the debtor and has shown that they have not been able to reach a mutual agreement to pay the debt. Basically, this means that the burden of proving the debt rests with the creditor and they must satisfy the court in this regard. That said, wage garnishment can come as a surprise and a pain that further exasperates an already sour financial situation. Have you been subject to wage garnishment? Here’s how to get out.
If your wages have recently been garnished, you are undoubtedly going through financial stress. This is because the lien can continue until a legal agreement is reached between you and the creditor. First of all, one of the most common reasons people’s wages are garnished is non-payment of taxes. This may be due to a deliberate attempt to evade or poor archiving practices. Many people are on this support. This can be due to a number of factors, one of which is incorrect tax filing, either doing it yourself or hiring someone who is not qualified or trained. Then there are a host of unscrupulous tax preparers who will collude with some to defraud the tax IRS who usually promise their clients unusually high tax refunds. So one of the best ways to avoid wage garnishment is to always file your taxes with accredited, qualified, and licensed entities.
If you have received a notice that you owe back taxes, you should immediately contact the IRS. First of all, this shows goodwill. Most wage garnishments would not occur if more people simply contacted the IRS once they knew they owe. Once you contact the IRS, ask if you can work out a payment and installment plan.
Offer in Compromise (OIC)
Sometimes the taxes owed are simply too much for the person to pay. In that case, what is called an Offer in Compromise can be negotiated. This is a request to the IRS to reduce the amount of taxes owed and make you pay significantly less. The IRS can approve or deny this request.
In the event that Chapter 7 or Chapter 13 is filed, the IRS can stop garnishment proceedings. This option should not be exercised hastily because filing for bankruptcy takes a toll on one’s credit. It is advisable to examine all the other options before opting for this one.
There are cases where the person whose wages are garnished can show that this is punitive and will affect their ability to pay for essential services such as food, clothing, and housing. However, this determination must be made by the IRS. If the IRS determines that the person cannot pay the wage garnishment, then they can be released from the entire process. However, the process can begin again if the person’s income increases in the future or if they are considered to be in a better financial situation.