There are a variety of different ways a creditor can choose to collect debts from a person they have loaned money to. Included in these options are income deduction orders and wage garnishment. These two collection methods are generally considered the same, but a few differences do exist between the two. A Dayton bankruptcy lawyer is well-versed in both methods, so it is best to contact one when in doubt.
Understanding Wage Garnishment
Wage garnishment is essentially a court ordered document which states an employer must withhold a certain amount of money from an employee’s paycheck each month. These withholdings are then given to the creditor in an attempt to pay off the debts they are owed.
Understanding Income Deduction Orders
Income deduction orders are almost identical to wage garnishment in that they too require the employer to withhold a designated amount of money each month. Income deduction orders are primarily used in chapter 13 bankruptcy cases.
Your Dayton bankruptcy lawyer will tell you, the differences between wage garnishment and income deduction orders are minimal. The biggest difference may be that wage garnishment can be used to satisfy almost any type of debt, while income deduction orders are primarily used for bankruptcy cases and child support.
Secondly, wage garnishment is limited by the amount of money it may take each month. Income deduction orders are not ruled by these same limits and it is possible to deduct the entire monthly payment plan from a person’s paycheck.
The third major difference is the fact that income deduction orders can be issued when you are not behind on payments. The court can order ongoing deductions for things like child support or alimony. Wage garnishment can only take place when a person is behind on their payments.