Wage Assignments: What happens if you’re in debt and you can’t make the payments on time? Typically, your creditors will pursue other legal means to collect on the balance owed – such as suing you in court or garnishing your wages or bank accounts. Wage assignment, which occurs when creditors can take money directly from an employee’s paycheck to repay a debt, is another collection tool available to creditors. This procedure is voluntary because by signing the loan you are signing the right for the creditor to take the funds, so no court order is required for the assignments.
What Is Wage Assignment?
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Employees should be aware of wage assignments. It is when a creditor can take money directly from an employee’s paycheck to repay a debt. This procedure is voluntary because by signing the loan you are signing the right for the creditor to take the funds, so no court order is required for assignments. Creditors are only able to do this if employees have signed off on it in writing, but if they haven’t, creditors will have a hard time getting your wages garnished.
When Can a Creditor Request One?
If you owe a creditor money, they may try to contact your employer for wage assignments. If the creditor has a judgment against you, they can file a court order with the court system. If no such judgment exists, the creditor can request that your employer voluntarily assign wages. If your employer agrees, they will withhold an agreed-upon percentage of your wages until the debt is paid in full. Wage assignment occurs when creditors can take money directly from an employee’s paycheck to repay a debt. Title (four sentences): Wage Assignment vs Garnishment: A wage-assignment happens before taxes are taken out of your paycheck while garnishment happens after taxes are taken out. Your wages are not guaranteed as long as wage assignment is voluntary, but if wage assignment becomes involuntary it provides greater protection because assignments stop when wages reach $744 per week or 25% of gross weekly income whichever is less.
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Are There Rules Regarding Wage Assignments?
There are two types of wage assignments: voluntary and involuntary.
- Voluntary wage-assignments are voluntary because the employee agrees that money can be taken from their paycheck in order to repay a debt.
- Involuntary wage-assignments happen when a creditor requests that an employee’s wages be garnished in order to repay a debt, or if an individual has been found guilty of committing fraud.
Federal Laws Regarding Wage Assignment
There are two federal laws that govern wage assignments. The first is the Wage Garnishment Law, which protects employees by requiring that creditors get a court order before they can take money from an employee’s paycheck. The second is the Consumer Credit Protection Act of 1968 (CCPA), which sets limits on how much of an employee’s wages can be garnished in a week or a month, depending on the state where the employee lives.
Should I Object To A Wage Assignment?
The first thing that you should do when you receive the assignment notice is to read it carefully. Ask yourself, Does this make sense? If not, then contact the creditor or debt receiver for clarification. If you still have questions after getting answers from them, consult with your financial institution or an attorney. And if the wage assignment does make sense, then sign it! Remember, creditors can’t force you to agree to wage assignments and they can’t take wages without your consent.
What Happens If I Don’t Pay My Debt?
If you are unable to pay your debts, creditors may do one of the following: wage-assignment, wage garnishment, or a lawsuit. Wage assignments occur when creditors can take money directly from an employee’s paycheck to repay a debt. This procedure is voluntary because by signing the loan you are signing the right for the creditor to take the funds, so no court order is required for assignments.
Am I Entitled To A Notice Before My Employer Garnishes My Wages?
There is no law that requires employers to notify you before they garnish your wages. However, your employer may have a policy in place requiring them to give you notice of the assignments. If you don’t get a notice before assignments, then contact your state labor department for more information about your rights.
If I Have Multiple Creditors Who Can Make A Claim For Wage Assignment, Whose Money Will My Employer Take First?
This will depend on your employer’s policy, so it is best to ask your human resources department. If they are not able to answer the question or you have multiple creditors, you should contact an attorney who specializes in wage assignments.
For example, if one creditor has a court order for wage assignment and the other does not, then the first creditor’s wages will be taken until the debt is paid off.