Your wages may be garnished if you owe child support, student loans, or back taxes, or a court judgment has been entered against you. A wage garnishment is when a court issues an order requiring your employer to withhold a certain amount of your paycheck and send it directly to the person or institution to whom you owe money, until your debt is paid off. Different garnishment rules apply to different types of debt -- and there are legal limits on how much of your paycheck can be garnished.
Wage Garnishments for Court Judgments
If you lose a lawsuit and a money judgment is entered against you, the person or entity that won the lawsuit can garnish your wages by providing a copy of the court order to the local sheriff or marshal, who will send it along to your employer. Your employer must then notify you of the garnishment, begin withholding part of your wages, send the garnished money to your creditor, and give you information on how you can protest the garnishment.
Most Creditors Need a Court Order to Garnish Your Wages
Unless you owe child support, back taxes, or student loans, your creditors -- those to whom you owe money -- cannot garnish your wages unless they first get a court order. For example, if you have defaulted on a loan, stopped paying your credit card bill, or have run up huge medical bills, your creditors can't just start garnishing your wages. They must first sue you, win, and get a court order requiring you to pay what you owe.
Federal law places limits on how much judgment creditors can take from your paycheck. The amount that can be garnished is limited to 25% of your disposable earnings (what's left after mandatory deductions) or the amount by which your weekly wages exceed 30 times the minimum wage, whichever is lower. Some states set a lower percentage limit for how much of your wages can be garnished.
You may not be fired or otherwise retaliated against because your wages have been garnished to pay one debt. Once you have one or more garnishments, however, less protection is available. Under federal law, you are not protected from retaliation if more than one creditor has garnished your wages -- or the same creditor has garnished your wages for two or more debts. Some states offer more protection.
If you want to protest a wage garnishment, you must file papers with the court to get a hearing date. At the hearing, you can present evidence showing that you need more of your paycheck to pay your expenses or that qualify for an exemption. The judge can terminate the garnishment or leave it in place.
Wage Garnishments for Child Support and Alimony
Since 1988, all new or modified child support orders include an automatic wage withholding order. (If child support and alimony are combined into one family support payment, the wage withholding order applies to the whole amount owed; however, orders involving only alimony don't result in automatic wage withholding.)
Once the court orders you to pay child support, the court or the child's other parent sends a copy of the order to your employer, who will withhold the ordered amount from your paycheck and send it to the other parent. If you are required to maintain health insurance coverage for your child, the payment for that will be deducted from your paycheck as well.
More of your paycheck can be taken to pay child support. Up to 50% of your disposable earnings may be garnished to pay child support if you are currently supporting a spouse or a child who isn't the subject of the order. If you aren't supporting a spouse or child, up to 60% of your earnings may be taken. An additional 5% may be taken if you are more than 12 weeks in arrears. To learn more, see Enforcement of Child Support Obligations.
You may not be fired, disciplined, or otherwise retaliated against because your pay is subject to a wage withholding order to pay child support.
Wage Garnishments for Student Loans
The U.S. Department of Education (or any agency trying to collect a student loan on its behalf) can garnish up to 15% of your pay if you are in default on a student loan. No lawsuit or court order is required for this type of garnishment; if you are in default, your wages can be garnished.
At least 30 days before the garnishment is set to begin, you must be notified in writing of:
- how much you owe
- how to get a copy of records relating to the loan
- how to enter into a voluntary repayment schedule, and
- how to request a hearing on the proposed garnishment.
Wage Garnishments for Back Taxes
If you owe money to the IRS, watch out: The agency can take a big chunk of your wages, and it doesn't have to get a court order first. The amount you get to keep depends on how many dependents you have and your standard deduction amount. Your employer will pay you a fairly low minimum amount each week and give the rest to the IRS.
The IRS must send a wage levy notice to your employer, who is required to give you a copy. The notice includes an exemption claim form, which you should complete and return.
State and local tax agencies also have the right to take some of your wages. In many states, however, the law limits how much the taxing authority can take. Contact your state labor department for information on your state's law.
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Bankruptcy Fequently Asked Questions
At Whitten & Whitten all first time consultations are free of charge.
We do not require you to bring any information, however if you are currently employed, your last two paycheck stubs could be helpful in helping you decide the best course of action.
Generally not. Once you come into the office we can run a credit report for you which should provide us with the information that we need. However, you must remember, that it will finally be your responsibility to list ALL of your creditors and debts. If you leave off or omit a creditor, that debt will not be discharged and you will ultimately be responsible for it. This is why it is so important to speak with an attorney if and when you are first considering bankruptcy.
Yes. When you file a bankruptcy, in almost every case, the bankruptcy court will issue an order to your creditors which prevents them from continuing any collection efforts against you outside of the bankruptcy court. Moreover, in almost every case, once you have filed for bankruptcy the court orders that all garnishments, home foreclosures, and car repossessions are suspended.
No. The bankruptcy courts have provided rights and exemptions for individuals so they may keep their retirement pensions and 401Ks. In fact, by filing bankruptcy an individual can actually protect their retirement better if they have not filed.