Most business owners know that having open collections with people who won’t pay willingly is largely a part of doing business. Even though they expect it, dealing with these collection accounts can be challenging.
Some businesses recognize that they can’t wait any longer to collect what’s owed to them. Once this happens, they may decide to take the debtor to court. One outcome of this is sometimes that the creditor obtains a wage garnishment so they can collect what’s owed to them.
Last resort method for collection
A wage garnishment is a court order that requires an employer to take part of the employee’s paycheck. The money that’s held back is sent to the creditor to make payments on their account.
The garnishment order will have the amount that can be deducted from the debtor’s check. This is usually relayed as a percentage of their disposable earnings. In most cases, there’s a 25% limit for the garnishment of a debtor’s check. This is set by federal law, but there are sometimes lower limits.
There are some cases in which creditors won’t receive the full amount taken out of the debtor’s paychecks. Some debtors may have multiple garnishments, but the total taken out of their checks for all garnishments combined can’t exceed the limits.
Obtaining a wage garnishment isn’t always simple, so it may be best to have someone to assist with the process. Running a business is a complex undertaking. Being able to count on someone else to handle the legal collection process can help a business owner to focus on growing their company.