Debt Consolidation

What Is Wage Garnishment?

Wage garnishment is a legal process that requires your employer to withhold a portion of your disposable income to repay a debt. Your wages can be garnished due to unpaid child support, back taxes, delinquent federal student loans or consumer debt, like credit card balances and medical bills.

The prospect of a wage garnishment can be a major source of stress. But as you’ll see below, the amount that’s withheld from your paycheck will depend on the type of debt you owe, the state where you live and whether you decide to fight the decision.

How does wage garnishment work?

If you’ve been unable to pay off a debt, your creditor or lender may decide to work through your employer to settle the debt with a wage garnishment. This means your employer will be required to withhold and send to your creditor a portion of your disposable income — the money left in your paycheck after deductions for taxes and mandatory charges for services like Social Security.

Most wage garnishments are court-ordered, though some others are not. If you have a consumer debt — like an unpaid credit card balance or an overdue medical bill — your lender or creditor will first need to take you to court to win a garnishment order against you. Other debts, like federal student loan debt and child support debt, do not require a lawsuit or a court order.

According to federal law, income subject to wage garnishment can include:

  • Wages
  • Salaries
  • Commissions
  • Bonuses
  • Payments from retirement programs, pensions and employment-based disability programs
  • Lump-sum payments like sign-on and referral bonuses, relocation incentives and attendance and service awards
Some types of income are exempt from garnishment. For example, the money you receive from Social Security or for unemployment insurance can’t be garnished to pay off consumer debt like credit cards and loans. However, these benefits may be garnished for child support or debts owed to the federal government. States also vary in what they consider to be exempt from garnishment.

Your rights in wage garnishment

As a consumer, you have certain rights when it comes to wage garnishment. For example, the federal Consumer Credit Protection Act (CCPA) has wage garnishment provisions that protect employees from being fired if the garnishment is just for one debt (there is no protection for two or more debts).

The CCPA also limits the amount of wages that can be garnished in any given week, for consumer debts and for child support and alimony. Other federal laws limit how much can be garnished for delinquent payments on federal taxes and student loans.

How much will your wages be garnished?

Here’s a look at how the size of your wage garnishment will depend on the the type of debt you carry:

How much money can be garnished from your paycheck?
Type of debt How much can be withheld
Child support and alimony If you are supporting another spouse or child (other than the spouse or child subject to the support order)…

  • 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 supporting 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 earnings, or the amount by which your disposable income exceeds 30 times the federal minimum wage — whichever amount is less
Federal student loans Up to 15% of disposable pay
Federal taxes Amount will depend on your filing status and the number of dependents you claim

Wage garnishment for child support and alimony

Child support is the main reason why wages are garnished in the U.S. In 2016, about 7% of the U.S. workforce had their wages garnished, and half of employees with garnished wages carried a child support obligation, according to a report from ADP, a payroll services provider.

If you are delinquent on paying either child support or alimony, your employer might have the right to garnish 50% to 65% of your disposable wages, depending on how late your support payments are and if you support another dependent spouse or child.

Wage garnishment for credit cards and other consumer debts

It’s possible to have wages garnished against debt from credit cards, private student loans, personal loans, medical bills and even rent. For unpaid consumer debt, the CCPA says creditors can garnish up to 25% of an employee’s weekly disposable earnings, or the amount of earnings that is over 30 times the current minimum wage, whichever quantity is less.

Check the table below to see how a wage garnishment might affect your paycheck, depending on how often you get paid. You’ll see that federal law is set up so that employees who make the federal minimum wage — now $7.25 an hour — are exempt from wage garnishment entirely if a 30-hour workweek earns them $217.50 per week or less.

How much of your paycheck can be garnished for consumer debts?*
Weekly disposable earnings Biweekly disposable earnings Semimonthly disposable earnings Monthly disposable earnings
$217.50 or less:
None
$435.00 or less:
None
$471.25 or less:
None
$942.50 or less:
None
More than $217.50 but less than $290.00:
Amount above $217.50
More than $435.00 but less than $580.00:
Amount above $435.00
More than $471.25 but less than $628.33:
Amount above $471.25
More than $942.50 but less than $1,256.66:
Amount above $942.50
$290.00 or more:
Max 25%
$580.00 or more:
Max 25%
$628.33 or more:
Max 25%
$1,256.66 or more:
Max 25%
*State laws may vary.
Source: U.S. Department of Labor

Consumer debt wage garnishment laws by state: Federal law gives states the option to shield a larger portion of paychecks from wage garnishment. Four states (North Carolina, Pennsylvania, South Carolina and Texas) ban wage garnishment for most consumer debts. Meanwhile, 32 states, the District of Columbia and the Virgin Islands, currently have stricter wage garnishment guidelines than those set forth by the federal government.

To see the laws on consumer debt wage garnishment in your state, check this appendix to a report from the National Consumer Law Center.

Wage garnishment for federal student loans

If you default on payments for federal student loans, federal law allows your loan holder to garnish up to 15% of your disposable pay without taking you to court. The garnishment can continue until your loan is paid in full or your account is removed from default.

With a federal student loan, you are entitled to certain rights before your wages can be garnished. For example, you have the right to be notified 30 days beforehand, as well as the right to try to negotiate a voluntary repayment agreement. You also have the right to request a court hearing if:

  • You believe you do not owe the debt or the amount of debt owed is incorrect.
  • The garnishment of 15% of your disposable wages would create a financial hardship.
  • You’ve been employed for less than a year after a previous job where you had leave involuntarily.

Wage garnishment for back taxes

If you’re delinquent on federal taxes, the IRS can garnish part of your disposable income without taking you to court — this is called an IRS wage levy. To satisfy your tax debt, the tax collection agency is allowed to take money from a bank account or another financial account. It can also seize and sell property like vehicles and real estate.

The IRS doesn’t publish limits for how much it can garnish from your wages. Instead, the agency publishes a chart that can help you see how much of your income might be exempt from garnishment, depending on your filing status and the number of dependents you claim.

Consider this scenario: Let’s say a single parent of two children who files taxes as a head of household has $4,000 in disposable income per month. According to the IRS, $2,270.83 of the parent’s income is exempt from wage garnishment, while $1,729.17 is not.

If the IRS decides to levy your wages or property, you’ll likely receive multiple notices beforehand. The first notice will ask for payment, while a final notice will inform you of a potential wage levy, as well as your right to a collection due process (CDP) hearing at least 30 days before the levy takes effect. The hearing is your chance to dispute the amount owed (if you haven’t already done so), as well as discuss possible alternatives for paying off the tax debt.

What to do when you receive a garnishment order

It’s understandable to be nervous when you receive notice of a potential wage garnishment. If you haven’t already done so, you may want to contact an attorney to help you determine your best path forward. You should also consider taking the following steps:

Step 1: Verify that the information is accurate

If you receive a garnishment order, make sure it includes information like:

  • How much money you owe
  • The name of the creditor
  • Instructions for how to object to the garnishment

Step 2: Work out an installment plan

If the information on your garnishment judgment is correct, contact your creditor to see if you can work out a reasonable payment plan. If your wages are being garnished for medical bills, for instance, your provider’s billing office may be willing to offer you a no-interest repayment plan.

A court-ordered repayment plan might help too. In Michigan, for example, debtors can file a motion asking a court to order installment payments for court judgements. The motion request takes a debtor’s income and financial situation into account.

Step 3: Accept the garnishment — or try to fight it

If you decide to accept a garnishment order, you can allow the wage garnishment to continue — or pay off the debt in a lump sum. To do the latter, considering borrowing from friends or family, or possibly taking out a personal loan. If you do take out a loan, keep in mind that you’ll need to keep up with monthly payments to avoid having to deal with possible wage garnishment again.

To fight a garnishment order, consider putting in a request for a court hearing. Here’s how to proceed:

Type of debt How to object to garnishment
Child support Request a court hearing to challenge what you owe or modify your child support order because of a change in personal circumstances, like job loss or drop in income.
Consumer debt Check your garnishment notice for instructions on how to object to the garnishment.
Federal student loans Request a court hearing with your loan servicer in writing, postmarked no later than 30 days from the date the garnishment notice was sent.
IRS tax debt Request a CDP hearing to dispute the amount owed or discuss alternatives to garnishing your wages.

FAQ: Wage garnishment

How long does a garnishment last?

Wage garnishment can last until your debt is fully paid off. Filing for bankruptcy stops wage garnishment for consumer debts, but not for court-ordered debts like child support.

Can you negotiate a wage garnishment?

Your creditor or lender may be willing to negotiate a monthly payment plan with you to avoid garnishing your wages. For many creditors, wage garnishment can be a complicated and expensive legal process.

Does wage garnishment affect your credit score?

As of 2017, the three major credit bureaus — Equifax, Experian and TransUnion — no longer allow civil judgments like wage garnishments to be posted in credit reports. However, a creditor can still add a note to a credit report to show that wage garnishment is helping assure that a credit account receives regular payments.

To see if a wage garnishment appears on your credit report, go to AnnualCreditReport.com and request a free copy of your report.

How do I find out who’s garnishing my wages?

Before garnishing your wages, your employer will likely send you a written notice with more information on your debt, how much will be withdrawn from your paycheck and how long the withdrawals will last. Speak with your employer’s human resources department if you can’t find your garnishment judgment.

How do you check a wage garnishment balance?

Contact your creditor to ask how much you still owe.

What happens after a wage garnishment is paid?

Once your debt is paid off, your creditor will likely notify your employer to stop the wage garnishment order.

 

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