Wage Garnishment: How It Works and What You Can Do

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Wage Garnishment: How it Works and What You Can Do
The wage garnishment process is a court judgment mandating that a part of your earnings be redirected to resolve a credit.
By Sean Pyles Senior Writer | Personal finances, debt Sean Pyles leads podcasting at NerdWallet as the producer and host of NerdWallet's "Smart Money" podcast. On "Smart Money," Sean talks with Nerds from the NerdWallet Content team to answer listeners' personal finance questions. With a particular focus on sensible and actionable financial advice, Sean provides real-world guidance that can help consumers better in their finances. Beyond answering listeners' money questions on "Smart Money," Sean also interviews guests outside of NerdWallet and produces special segments to explore topics like the racial wealth gap as well as how to get started investing and the background of student loans.
Before Sean was the host of podcasting for NerdWallet He also covered issues related to consumer debt. His writing has been featured on USA Today, The New York Times and other publications. When when he's not writing about personal finance, Sean can be found working in his garden, going on runs and taking his dog for long walks. He is based at Ocean Shores, Washington.





Sep 19 2022


Written by Kathy Hinson Lead Assigning Editor Personal finance, credit scoring, debt and money management Kathy Hinson leads the core personal finance team at NerdWallet. In the past, she worked for 18 years working at The Oregonian in Portland in roles including copy desk chief and team editor and designer. Previous experience included the editing of copy and news for various Southern California newspapers, including the Los Angeles Times. She earned a bachelor's degree in journalism and mass communications in Iowa's University of Iowa.







A majority of the items featured on this page are from our partners who compensate us. This impacts the types of products we write about and the location and manner in which the product appears on a page. However, this doesn't affect our opinions. Our opinions are entirely our own. Here is a list of and .



The process of wage garnishment takes place when a court orders that your employer defer a certain amount of your pay and then send it directly to the person or creditor who owes you money, until your credit is paid.
Child support, consumer debts , and student loans are the most common reasons for garnishment of wages. Your earnings are subject to garnishment until the debt is paid in full or otherwise settled.
You are protected by law and limitations on the amount that can be taken in one go. There are steps you can take to lessen the effect and assist you in recovering.
Are you ready to get rid of your debt?
Keep track of your spending and balances in one spot to help you see the way to get out of credit.






Different types of garnishment of wages and how it is done
The practice of garnishing wages is more widespread than you may believe. A report by ADP Research Institute found that 7 percent out of 12 million employees it assessed had the garnishment of their wages in 2016. For employees aged 35-44 the figure was 10.2 percent. The most common reasons for this were child support; consumer debts; and .
>> MORE:
There are two kinds of garnishment:
In the case of wage garnishment , creditors may legally demand that your employer transfer a portion of your wages to pay off your obligations.
In non-wage garnishment, often known as an levy on banks, creditors may tap into your bank account.

Garnishment often happens when a debt collector sues you for non-payment of the debt, and then wins in court. Sometimes, however the creditor may be able to demand garnishment without a court order, for example, if you owe child support, back taxes or the balance of the federal student loans.
The court will issue notices to your employer or bank, and the garnishment will begin in five to 30 business days, based on your creditor and state. The garnishment will continue until the entire debt, including court fees and interest to be paid.
How much of your salary is eligible for garnishment?
This article will provide an overview of the federal limitations on the amount of your available income can be used by a creditor. (When it is wage garnishment "disposable income" refers to anything left over after deductions that are necessary, like taxes and social Security.)
Kind of debt



Percentage of the weekly disposable income that can be taken



Credit card and medical bills, personal loans and most other consumer debts


A minimum of 25% or the amount of your weekly income exceeds 30 times the federal minimum wage (currently $7.25 an hour), whichever is less. Here's how that breaks down:
The weekly amount you earn is greater than $290 A maximum of 25percent will be allowed.
If the amount is in the range of $289.99 and $217.51 The amount that is greater than $217.51 can be taken.
* If the amount is $217.50 or less it isn't allowed to garnish.


Child support and alimony


Up to 50% if you are caring for a spouse or child and, if not, 60 60%. In the event that you're more than twelve weeks behind in your payments Additional 5percent could be claimed.


Federal student loans


Up to 15 15%.


Taxes


The Internal Revenue Service will determine the amount you pay by taking standard deductions and your number of dependents.








Nerdy Tip
The laws of each state regarding garnishment differ significantly. The state you live in may offer additional protections that shelter your income and bank account balance or offer exemptions for situations like being head of household with dependent children. In the majority of cases, creditors have to be aware of exemptions and ask for these independently. Nonwage garnishment is less common, is generally less regulated and has fewer limitations for lenders.


What you can do about wage garnishment
You have some rights in the process of garnishing your wages however, in all states, it's your obligation to know about and exercise these rights.
You must be legally informed about the garnishment.
You can file a complaint in the event that the notice contains incorrect details or you think you don't have the right to owe the amount.
Some forms of income, such as Social Security and veterans benefits are not subject to garnishment for income. However, they may be susceptible to being confiscated .
You won't be fired for a single wage garnishment, however, you'll lose this protection in the event that you take several garnishments.

If you believe the judgment was erroneous or it's causing undue harm to your finances you may .
What do you do when you get a garnishment judgment
First, carefully read the judgment to verify that all the information is accurate. Be sure it's not something you already paid and is in fact your obligation. If so, you should think about the amount to be taken and what this could affect your financial situation.
Then weigh what to do next. If you haven't done so before, you may want to consult an attorney who specializes in consumer law to figure out what's right for you. There are three choices:
Work out a different deal
Make contact with your creditor. "A many consumers don't realize the power of a phone call," says Tara Alderete director of enterprise education at the nonprofit financial counseling company Money Management International. "Look at your budget, look at how much you owe, the amount you have to pay in cash, and then contact the creditor to find out how you can come up with an arrangement for payment. Consumers and creditors always have this option."
Contest the ruling
If you think the garnishment was made in error, will cause undue harm or is being incorrectly implemented, you may object to the court. You'll need to take action quickly. You could have as little as five days to contest the decision.
Accept the garnishment
You can take care of the garnishment by installments as the judgment states or pay in a lump amount. Borrowing money from a relative or taking out a to pay the judgment off, which is possible even with the garnishment placed on your credit report, may help you get rid of the stress of a prolonged payment schedule.
It's not pleasant for your employer to learn that you've been sued in debt However, it's better to tell your human relations manager or department.
"Wage garnishment could cause stress at work Therefore, you should be proactive in talking with your employer," Alderete says. "Have an open discussion where you say what's happening and you're not going to let it to become a problem."
If wage garnishment causes financial burden
If you don't see a path forward from wage garnishment, you can seek the free help of a professional to discuss your , such as a repayment plan or bankruptcy.
A judgment of garnishment can remain on your credit reports over a period of up to 7 years and can impact your credit score. However, there are easy ways to bolster your credit, both during and following wage garnishment.
And sticking to it -- will help you maintain control of your finances to avoid the possibility of another garnishment. Once you've established a budget, you'll be able to borrow products like a secured credit card to use .



Author bios: Sean Pyles is the director of production and host of NerdWallet's Smart Money podcast. His work has appeared in The New York Times, USA Today and elsewhere.







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