I have a garnishment from my employer. They take payroll taxes off before determining disposable income. What's to stop me from just raising my additional federal withholding by a lot to make my disposable income too low to garnish and then get huge federal refund next year?
Edit: Mark, they take your income AFTER payroll taxes. This is according to state, and federal law, and is even disclosed in my notice, which tells me how they determine disposable income. It is stated 30 x min wage which is $217.50 per week. I'm not sure where you get "gross income" from.
How much is the debt? You are going to have to deal with the debt sometime. If the debt is a garden variety judgment in a MI Court you could ask for a payment plan. Why not file the bankruptcy (if you can). In a Ch. 7 you can get back everything garnished in the 90 days before filing if it totals more than $600.
No. A creditor receives up to 25% of your gross income by wage garnishment. This is taken from each check. By increasing our withholdings, you would not impact the amount taken, and would reduce your takehome income even further. You should consider setting up a payment plan and consulting with a debt relief agency, debt defense attorney, and/or bankruptcy attorney.
