Falling behind financially is a very stressful experience. Those who don’t have the personal resources to consistently fulfill all of their financial obligations often have to make rather difficult choices. They might pay their mortgage but let their credit cards fall behind. They might have to choose between repairing a vehicle and buying groceries for their family some months.
Even if creditors have information about someone’s current financial struggles, they are unlikely to offer much lenience after someone has missed payments or made multiple payments after the due date. In fact, creditors are likely to initiate legal action, like debt-related lawsuits, that could have major implications for someone’s finances in the event that someone defaults on their responsibilities. A creditor lawsuit could potentially mean that the courts grant a garnishment of someone’s wages. What would that mean for an individual living in New Jersey?
Creditors have a right to repayment
Under New Jersey state statutes, creditors denied full repayment in accordance with their contract with a borrower can potentially make claims against specific assets or against the future income of the party that has not fulfilled their obligations. Wage garnishment allows creditors to receive a portion of someone’s income directly instead of relying on the debtor to send funds.
In theory, wage garnishment can mean even more financial complications for someone struggling to pay their bills on time. Thankfully, New Jersey Law does limit how much of someone’s income can go to wage garnishments. The garnishment will only amount to 25% of someone’s disposable earnings or any weekly pay beyond 30 times the current minimum wage.
Bankruptcy can save someone from garnishment
Depending on the kind of bankruptcy that someone files and their current financial circumstances, wage garnishment may or may not end when the courts grant an automatic stay related to a pending bankruptcy filing. The best way to avoid the stress caused by wage garnishment is to proactively respond to creditor lawsuits with a bankruptcy instead of filing after the courts rule in favor of a creditor. A bankruptcy filing initiated after a lender serves someone with notice of a pending lawsuit can lead to the dismissal of the lawsuit temporarily and potentially prevent the courts from granting a judgment that will diminish someone’s income.
Making use of the right tools can have a major impact on those who are struggling financially and worried about the future in New Jersey. Seeking legal guidance can help an individual to better understand which opportunities may best serve their interests as they’re struggling financially.
