Can Creditors Garnish Your Wages in Massachusetts?
Can Creditors Garnish Your Wages in Massachusetts?
One of the more unsettling experiences for someone struggling with debt is finding out that a creditor is trying to take money directly from their paycheck.
A question I sometimes hear is, "I received paperwork saying a credit-card company wants to garnish my wages. Can they really do that?"
The answer is yes, under certain circumstances. But Massachusetts has some fairly strong protections for people whose wages are being attached.
And if the person has substantial debt beyond the creditor seeking the garnishment, bankruptcy may provide a more permanent solution.
A Creditor Generally Needs a Judgment First
Suppose you owe $12,000 on a credit card. You stop making payments because you simply cannot afford them.
Eventually, the account goes into collections, and the creditor files a lawsuit.
If the creditor obtains a judgment, it may seek to collect that judgment through several methods, including attaching your wages.
In Massachusetts, wage garnishment is generally referred to as wage attachment or trustee process.
For an ordinary consumer debt, the creditor cannot simply contact your employer and demand that money be deducted from your paycheck.
Under Massachusetts General Laws Chapter 246, Section 32, a creditor seeking to attach wages generally must first obtain a judgment and then obtain court authorization for the wage attachment. The statute also generally requires advance notice and an opportunity for the debtor to object. Massachusetts General Court
That distinction is important.
Receiving a collection letter or even being sued does not necessarily mean your wages are about to be garnished.
Nevertheless, ignoring a lawsuit is a mistake. Once a creditor obtains a judgment, its collection options become considerably more serious.
How Much of Your Paycheck Can a Creditor Take?
Massachusetts provides greater protection than many people realize.
Under Massachusetts General Laws Chapter 246, Section 28, the amount of wages protected from ordinary attachment is generally the greater of:
85% of your gross weekly wages; or
50 times the higher of the federal or Massachusetts hourly minimum wage.
Massachusetts currently has a $15 hourly minimum wage. That means the second calculation protects $750 per week. Massachusetts General Court
Let's look at a couple of examples.
Suppose you earn $1,000 per week before taxes.
Under the 85% calculation, $850 is protected. Since that is greater than $750, the creditor generally cannot attach more than $150 of those weekly wages.
Now suppose you earn $800 per week.
Although 85% of your wages would be $680, the $750 minimum protection is greater. Consequently, an ordinary creditor generally could attach no more than $50.
If your gross weekly wages are $750 or less, they are generally fully protected from ordinary wage attachment.
These protections are significant, but they do not necessarily make a wage attachment harmless.
Someone living paycheck to paycheck may have difficulty losing even $50 or $100 per week.
Does Filing Bankruptcy Stop Wage Garnishment?
In most cases, yes.
When someone files Chapter 7 or Chapter 13 bankruptcy, the filing generally creates what is known as the automatic stay.
The automatic stay ordinarily prevents creditors from continuing collection efforts on debts incurred before the bankruptcy filing.
That includes most wage garnishments, collection lawsuits, bank attachments, and other efforts to enforce judgments.
The protection generally takes effect immediately upon filing the bankruptcy petition, although important exceptions apply, particularly when someone has had previous bankruptcy cases dismissed within the preceding year. WA Bankruptcy Court
For example, suppose someone has $35,000 in credit-card debt and one creditor has obtained a judgment and begun garnishing wages.
If that person qualifies for Chapter 7 and the debts are dischargeable, filing bankruptcy will ordinarily stop the ongoing garnishment. The eventual discharge can also eliminate the person's legal obligation to pay those credit-card debts.
That is a much different result from simply negotiating a payment arrangement with the one creditor that obtained the judgment.
The bankruptcy addresses the larger debt problem rather than just the immediate garnishment.
What If Money Has Already Been Taken?
This is an important distinction.
Filing bankruptcy generally stops future collection activity covered by the automatic stay, but it does not automatically mean that every dollar previously garnished will be returned.
Depending on when the money was withheld, whether it was paid to the creditor, the amount involved, and other circumstances, there may be grounds to recover some of those funds.
Bankruptcy law contains provisions allowing certain payments and transfers made before filing to be recovered under appropriate circumstances.
However, I would not promise a client that previously garnished wages will automatically be refunded.
I would want to review the garnishment paperwork, pay stubs, and payment dates before making that determination.
There is also a practical issue involving the employer.
Even though the automatic stay generally takes effect when the bankruptcy is filed, the creditor and payroll department need to receive notice of the filing so that the wage deductions can be stopped.
If a garnishment is already underway, I would want that issue addressed promptly.
Not Every Wage Deduction Is Treated the Same Way
The protections discussed above primarily concern ordinary consumer debts, such as credit cards, personal loans, and medical bills.
Child support and alimony obligations are different.
Massachusetts' ordinary wage-attachment exemption does not apply to court-ordered child support, alimony, or separate maintenance in the same way. Federal law also permits certain domestic-support withholding to continue despite a bankruptcy filing. Massachusetts General Court
Tax debts and federal student loans can also involve different collection procedures and rules.
For that reason, the first question should always be: Who is taking the money, and what type of debt is involved?
The answer may substantially change the available options.
Is Bankruptcy Worth Filing Just to Stop a Garnishment?
Not necessarily.
If someone has one relatively small judgment and very little other debt, there may be more economical ways to resolve the problem.
A negotiated settlement or payment arrangement may make more sense.
But consider someone who owes $50,000 in credit cards, has several collection accounts, and is now facing a wage attachment.
That person may be spending money every month trying to keep individual creditors satisfied without making any meaningful progress toward eliminating the overall debt.
In that situation, Chapter 7 may provide a much better result if the person qualifies.
Chapter 13 may also be appropriate, particularly when someone has assets to protect or other financial problems that need to be addressed through a repayment plan.
The decision should be based on the person's entire financial situation, not simply the fact that one creditor has obtained a judgment.
Don't Ignore a Wage Attachment Notice
If you receive notice that a creditor is seeking to attach your wages, take it seriously.
Massachusetts law provides meaningful protections, and you may have grounds to object to the attachment. But court deadlines still matter.
More importantly, a wage attachment is often a sign that the underlying debt problem needs to be addressed.
If you are facing wage garnishment or collection lawsuits, Common Law Associates, LLP can review your debts, income, and financial circumstances to determine whether Chapter 7, Chapter 13, or another approach makes the most sense.