Wage Garnishment: Finances under control?
But what does that even mean, wage garnishment? The employer must transfer the share of the salaries exceeding the subsistence level directly to the debt collection office. This includes the 13th monthly salary and bonuses. Employees affected by the measure will only receive the minimum amount necessary according to the calculations of the debt collection office: to pay the health insurance premiums, electricity bills and a modest subsistence. Saving is no longer possible. Frequently, further debt collection proceedings are initiated under such circumstances, which is why the level of debt often rises in the context of lengthy attachment proceedings (see chart).
Source: Debt counselling Switzerland
Wage garnishment does not happen over night. Often and for quite some time, those concerned believe they have everything under control – before suddenly everything changes.
Crushing fixed costs, personal crises, changes in income: those are the reasons that lead to wage garnishment. This is when many of those affected feel humiliated: the employer becomes aware of the financial problems of their employee; all financial matters must be disclosed to the debt collection officers; there is no financial leeway in everyday life.
Can wage garnishment prevented?
It very much depends on the point of time. Financial problems are often ignored. Many people are not aware that taking out a loan will only increase their problems rather than solve them. Many people only admit they no longer have their finances under control after they have received several notices from debt collectors. Often, debtors have no overview of their entire amounts owed.
What to do when facing wage garnishment?
Many feel overwhelmed and bury their heads in the sand. However, it would now be important to get an overview of their own financial situation. How much do I owe? How can I prevent further debt? Are there any options for me to restructure my debt?
These 6 measures will help you manage your money
1. know your expenses: Make a note of your monthly expenses and get an overview of your finances. Make yourself aware of your fixed costs, as these usually make up a large proportion of your expenditure.
2. plan your budget: After you have noted your expenses, make a monthly balance sheet. Monthly income minus all expenses equals your balance sheet.
3. build up reserves: Save for larger, planned expenses such as holidays and dental bills and build up reserves for unplanned items such as a car repair or other additional costs at the end of the year.
4. Automate cash flows: Set up standing orders for planned reserves or saving.
5. change habits: Avoid impulse and bargain buys. Get into the habit of sleeping on purchase decisions. Think ahead: maybe you’ll be travelling longer after work tomorrow and it makes sense to pack a bottle of water instead of buying it at a kiosk.
6. seek advice early on: The earlier you get support, the easier it will be to avoid wage garnishment. The Proitera team will be happy to help you with this.
Our recommendations for companies:
- Employees who repeatedly ask for advances should be strongly encouraged to consult a budget advisory service. Provide them with a specific address with a telephone number. Proitera will be happy to provide your partner companies with flyers.
- Grant personal loans only in connection with a budget advisory service and on their recommendation. A loan will not solve all problems!
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