Tag Archives: wage garnishments

Taxes and the Collection of Unpaid Debt

taxt debt, tax debt collection, debt collectionSoon the holidays will be over and tax season will be staring us in the face.  The average tax refund in the United States is around $3,000, but not every tax payer will receive a refund.  Many people will procrastinate preparing taxes because they fear how much money they may owe.  After all, who wants to write a big check to the government?  Most people would rather owe money to their creditors than to owe Uncle Sam.  Maybe this is because they know that the IRS can garnish wages and levy or seize your property.  The IRS can even charge interest and fees on the collection of unpaid debt such as back taxes.


What If I Can’t Pay Tax Return Amount Due?

There are always tax-payers who are shocked in disbelief after seeing the dollar sign at the end of their tax form.  Many find that the taxes due are more than they can’t afford to pay.  What next?  The worst thing you can do is to ignore or run from your taxes.  There are stiff penalties for not paying taxes and it will cost a lot more in the long run.  If you can, file for an extension or make a partial payment.  Then, call the IRS to setup a payment plan.  Lastly, don’t forget to adjust withholdings or quarterly payments to ensure that you’re not going to owe more than you can afford to pay next year.

The IRS has payment options.  Try to work with them to resolve your tax debts.  If not, the IRS has the right to enforce collection of unpaid debt.  Eventually, you will hear from the IRS, or in some cases, from a private collection agency hired by the IRS.  You may begin to see wage garnishments coming from your paycheck.


How Bankruptcy May Eliminate Some or All Unpaid Debt

If you find that none of the tax return payment options reflect what you can pay, then you may have some larger debt problems that need to be addressed.  This is where we may be able to help.  Filing bankruptcy with a bankruptcy attorney at Debt Advisors can stop wage garnishments in most cases.  Wage garnishments stop due to the bankruptcy “automatic stay.”  This means that the IRS, or any collection agency, must cease all collection activities associated with the debts that you owe during the bankruptcy process, and as long as the bankruptcy is in effect.  This may include debt from unpaid taxes as well as other debts such as credit cards and medical bills.  There are some exceptions that can be discussed in detail with one of our lawyers.

If you are overwhelmed by debt, and can’t pay your taxes, find out if you are a candidate for bankruptcy. Some of your unpaid debt may be dischargeable. Reach out to Debt Advisors Bankruptcy Attorneys for legal advice.  Don’t procrastinate.  It’s always best to resolve debt issues as soon as possible.  At Debt Advisors Bankruptcy Law Firm, the initial consultation is free.

Wisconsin residents; protect your paycheck and stop wage garnishments.

MYDEBTADVISORA women who had been divorced in Wisconsin for nearly four years, was shocked to find out that her wages were going to be garnished because her ex hadn’t paid his student loans.  Because the student loans originated during the time of legal marriage, the woman was then held liable for repayment when her ex-husband neglected to pay. Midwestern states, including Wisconsin, have some of the highest wage garnishments by geographic region.  Studies indicate that basically the same proportion of women and men experience wage garnishments.  However, the most common cause of a wage garnishment involves the failure to pay child support.  In this case, men are six times more likely than women to have wages garnished.  If a debt collector or creditor gets permission from a court, or has the legal right to take money from your paycheck or tax return; your sex, race, income, status or best intentions will make no difference.  ADP Research Institute® used aggregated, anonymous payroll data from 2013, comprised of 13 million employees ages 16 and older for study found here.

Overview of WI wage garnishment process

The majority of wage garnishments are initiated when a creditor seeks a court order to obtain judgement which then allows them to take from your personal earnings to pay off a debt.  The collector provides notice of the intended action to the debtor, typically in the form of a ‘demand letter.’  The notice will state details about the garnishment including the debt source, garnishment amount, and duration of the garnishment.   Depending on the type of debt, certain creditors don’t need a court order.

  • If you owe money to a state or federal agency such as the IRS, your wages can be garnished without a court order.
  • If a court has ordered you to pay child support, your wages may be garnished without additional court action.

If there are no earnings to pull from the originating debtor, the collector or creditor may then seek payment from a spouse or co-signer.  A garnishment letter may or may not contain forms to request a hearing.  If you do nothing, the garnishment order will proceed.   If you wish to dispute, immediately contact a law firm with experience in preventing wage garnishments.

You have the right to dispute a wage garnishment

Title III of the Consumer Credit Protection Act limits the amount of employee’s earnings that may be garnished.  In some cases, the law may protect the debtor from being fired, and contain other protections for personal income earnings, pension and retirement programs.  U.S. Dept. of Labor Fact Sheet #30: Federal Wage Garnishment Law, Consumer Credit Protection Act’s Title 3. The wage garnishment law specifies that the garnishment restrictions do not apply to certain bankruptcy court orders.  When you file for Chapter 7 or Chapter 13 bankruptcy, an automatic stay is created which stops creditors from taking any legal action or pursuing any collection against you, including wage garnishments.Debt Advisors Law Offices is familiar with federal laws, state protections, restrictions, exceptions,and bankruptcy laws regarding wage garnishments. Setup a free consultation at one of (6) convenient locations in the Milwaukee and Madison Metro areas.