Wage garnishment is a legal process in which a portion of a worker’s income is deducted by their employer and redirected to repay a legally owed debt, such as a student loan, child support, taxes, or any other debt.
This substantially influences the individual’s financial stability and should be avoided. Continue reading to learn more about wage garnishment and essential information about it.
Wage garnishment is a legal process that deducts a percentage of an individual’s salary from their work and sends it directly to a creditor to repay a debt.
What is Wage Garnishment?
Wage Garnishment is a legal means of recovering money from someone who owes you money. When an employee owes money, a court or government agency may order you to deduct money from their paycheck. The employee’s debts are paid off using the money withheld.
A judge rules upon most garnishments. The IRS, state tax collection organizations like ALDOR, and other non-tax government bodies may also order garnishments for unpaid debts.
Employers with employees whose wages are being garnished will get a “writ of garnishment” from a court or government body.
The employer is then accountable for regularly calculating, withholding, and submitting the garnishment to the creditor or agency. Employers risk incurring high fines if they don’t abide by garnishment orders.
What are the types of wage garnishment?
There are two types of Wage Garnishments:
Wage garnishment is a legal process that deducts a percentage of an individual’s salary from their work and sends it directly to a creditor to repay a debt. This garnishment is typical for debts such as child support, taxes, and school loans.
Non-wage garnishment is seizing money from sources other than a person’s regular paychecks. Examples of garnishment other than wages include:
- Bank account garnishment
- Social Security garnishment
- Retirement account garnishment
- Pension plan garnishment
- Property seizure
Non-wage garnishment, like wage garnishment, varies by jurisdiction and the regulations that regulate it.
For what reasons can my wage be garnished?
In most cases, a court or government body will impose wage garnishment on paying back particular kinds of debt, such as:
- Unpaid taxes
- Unpaid student loans
- Child support arrears
- Alimony
- Court-ordered damages in a lawsuit
- Defaulted consumer debt, such as credit cards or personal loans
Wage garnishment may also be ordered as a result of a court judgment, such as when an individual is compelled to pay damages in a lawsuit.
The reasons for wage garnishment may differ depending on where you live. This is because the rules and laws that govern wage garnishment vary from place to place.
Can payday lenders garnish my wages?
Yes, in some instances payday lenders may have the right to garnish your wages if they try to sue you and obtain a court judgment against you. Federal and state limits, which change based on the regulations in your jurisdiction, apply to the amount that can be garnished.
It is crucial to understand that wage garnishment is a last resort for payday lenders and other creditors. They must file a lawsuit against you and win a court ruling to seize your wages.
Additionally, you might be able to work out a settlement or payment plan with the lender in some circumstances to prevent wage garnishment.
How does wage garnishment work?
If you cannot repay a debt, your creditor or lender may use a wage garnishment to collect the debt from you through your employment.
This implies that your employer will be compelled to withhold and transmit a portion of your disposable income to your creditor. Disposable income is the money in your paycheck left over after deductions for taxes and other statutory expenses like Social Security.
Although some are not, the majority of wage garnishments are court-ordered. If you owe a consumer debt, such as an unpaid credit card amount or an unpaid medical bill, your lender or creditor must file a lawsuit against you to obtain a garnishment order.
A lawsuit or a court order is unnecessary for some debts, including federal student loan debt and child support arrears.
How much of my wages can be garnished?
| Type of debt | How much can be withheld |
| Child support and alimony | If you’re providing for another person’s spouse or child
➔ 50% of disposable wages if you’ve been delinquent for less than 12 weeks ➔ 55% of disposable wages if you’ve been delinquent for more than 12 weeks If you are not providing for another spouse or child… ➔ 60% of disposable wages if you’ve been delinquent for less than 12 weeks ➔ 65% of disposable wages if you’ve been delinquent for more than 12 weeks |
| Consumer debts (credit cards, medical bills, personal loans) | Up to 25% of your disposable income, or the amount by which it surpasses 30 times the federal minimum wage, whichever is smaller |
| Federal student loans | Up to 15% of disposable pay |
| Federal taxes | The amount will change depending on your filing status and the number of dependents you declare |
The amount of garnishment can vary according to the type of debt. Here’s more information.
What can I do if I get a garnishment judgment?
When you obtain a garnishment judgment, you can take several steps, including
- Review the judgment to confirm its accuracy: Check to see if the judgment complies with local legislation and that the debt and amount indicated in the judgment are accurate.
- Negotiate a payment plan: If the debt is accurate, you might be able to work out a plan with the creditor to pay it off gradually and prevent wage garnishment.
- Challenge the garnishment: You may be able to contest the garnishment in court if you think the debt is inaccurate or that the garnishment is not legal.
- Seek legal advice: If you’re unsure what to do, you might want to go to a financial advisor or an attorney who can help you understand your rights and alternatives.
Can I stop wage garnishment?
Yes, wage garnishment can be avoided in the majority of cases. Open communication with your lender is the best strategy for preventing wage garnishment.
When you start having trouble making payments, contact your lender and let them know. In most circumstances, they will be able to provide you with a payment schedule that is more convenient for you, but open communication is essential.
If you don’t know what to do, you might want to talk to a financial expert or an attorney who can explain your rights and options.
