Can My Wages Be Garnished If I am Contractor, Self Employed, or Gig Worker?

Wage Garnishment in New Jersey

Wage garnishment is one way that creditors can try to secure repayment by collecting money directly from your paycheck. At the Law Office of Joel R. Spivack, we help consumers get back on their feet and curb predatory debt collection practices.

Can a 1099 employee have their wages garnished? Our attorneys are here to help with all types of wage garnishment issues, including those involving independent contractors. When you call our office, we’ll walk you through the laws on wage garnishment and independent contractors. Whether your creditor is within their rights or requesting unlawful wage garnishment, we can help you explore your options. 

Can a 1099 Employee Have Their Wages Garnished?

Because contractor earnings are not wages paid by an employer, creditors cannot use wage garnishment to reach those funds unless the employee has otherwise given consent. But there are some circumstances where independent contractors can have their earnings garnished.

Can DoorDash Wages Be Garnished?

Businesses like Uber, DoorDash, and Instacart primarily hire independent contractors to perform their services. Contractor earnings are technically not wages. However, these companies have contractual agreements granting the company permission to “garnish” the contractor’s earnings. If the company you’ve been working for is preventing you from cashing out your earnings on the app, a creditor could be trying to garnish your wages. Contact an attorney to help you stop the wage garnishment on your self-employed income.

What Is Wage Garnishment?

If you owe money for a debt, state law enables a creditor to obtain a legal judgment for wage garnishment. Wage garnishment means a court order requires an employer to withhold an individual’s earnings for the payment of a debt. An individual creditor, such as a credit card company, commercial lender, the IRS, or the state Department of Revenue, can request wage garnishment. In addition, courts often allow wage garnishment to enforce child support payments. Thus, because independent contractors aren’t paid salaries or wages, creditors shouldn’t be able to garnish contractor earnings.

What Can Be Garnished If I’m an Independent Contractor?

If you don’t have wages to garnish, a judgment creditor can request a non-wage garnishment on any funds you hold. When a creditor receives a non-wage garnishment order, they must serve the order on your bank to access your bank account. The order may allow them to levy on one-time payments, including compensation received for services rendered, commissions, receivables from a particular source, or a contract payment. If you expect compensation, the creditor can levy on that incoming payment if the order allows them to do so.

Other Options for Creditors to Collect Money

Depending on the terms of your credit agreement, creditors have other options to recover an unpaid debt. If the debt is on real estate, creditors may be able to liquidate your property at a sheriff’s sale, place a lien on the property, or initiate foreclosure proceedings. Creditors may also obtain a writ of execution, which allows the sheriff to take money out of a business cash register (till tap) or seize other property.

Do You Own a Business Entity?

If you’ve registered your business as a corporation or limited liability company (LLC), there are limits to what property creditors can levy on. If you owe a personal debt, the creditor cannot seize the company’s property. The creditor can collect only against your property—funds designated for you as an individual, such as distributions or other assets. Thus, a judgment creditor could seize your interest in the company itself (your shares or interest in the corporation or LLC).

In addition, you could also be an employee of the corporation or LLC. If the company pays you as an employee, your earnings will be subject to wage garnishment because the entity is your employer. Furthermore, a judgment creditor in some states cannot garnish a member’s LLC income. Instead, a judgment creditor must go through a special proceeding and obtain a “charging order” before receiving member distributions.

How Can the Law Office of Joel R. Spivack Help?

The prominence of contractor-only employers like GrubHub and Lyft has risen in recent years. Therefore, the law has yet to catch up. While the Consumer Credit Protection Act’s Title III (CCPA) limits the amount of wages a creditor can garnish, it applies only to employees with recurring wages, not freelancers. When you call the Law Office of Joel R. Spivack, an experienced consumer debt attorney will help you protect your property. 

In some cases, filing for bankruptcy can be your best option. When you file a bankruptcy petition, an automatic stay or bankruptcy injunction stops creditors from attempting to collect a debt. Then, you can liquidate your assets and pay off your debts or reorganize to make your debt more manageable. Contact us today to explore your options.

We are here to help you.

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We are licensed to practice in New Jersey and Pennsylvania.

Attorney Joel R. Spivack is an experienced bankruptcy and residential real estate transactions lawyer in Cherry Hill, New Jersey. Clients come to us for legal services, but what we really provide is peace of mind. For more than 30 years, Attorney Spivack has helped people make wise, informed decisions about bankruptcy filings, debt relief options and residential real estate transactions.
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