What Is Wage Garnishment?

Wage garnishment is a legal process in which creditors seek court orders to take a portion of a debtor’s paycheck to pay delinquent debt. Courts tell employers to garnish wages for several reasons: late child support payments, student debt, credit cards, personal loans or back taxes.

Often, wage garnishment is the last resort for nonpayment. Chances are that you’ll be given several opportunities to pay your debt before a court turns to wage garnishment. The most common reason for wage garnishment is unpaid child support.

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How do wage garnishments work?

Wage garnishment can happen when people fall behind on mandatory payments and their creditors pursue an aggressive collections strategy. For example, if a parent doesn’t make court-ordered child support payments and falls behind on their obligation for several months, the other parent can argue that they’re in contempt.

If a judge finds that the first parent is seriously behind on payments, they may issue a court order that requires the parent’s employer to withhold a percentage of each paycheck, then have it sent to the parent owed the child support until the debt has been repaid. Wage garnishment involves court orders in most but not all situations, as the government can automatically garnish your wages depending on what you owe.

The amount depends on several factors including how much income a person earns, what kinds of debt they owe and how far they’ve fallen behind. It’s often calculated as a percentage of disposable income, which factors in taxes.

Reasons for wage garnishment

Several types of delinquent debt can lead to wage garnishment:

  Child support

If a judge orders wage garnishment for unpaid child support, a parent could pay a considerable percentage of their income. The exact amount depends on whether the parent supports another spouse or child and whether they’ve been delinquent for more than 12 weeks. In some situations, a parent could be liable for up to 65% of their disposable wages.

  Consumer debt

Lenders provide unsecured access to credit through credit cards or personal loans. If you fall behind on those debt payments, the account could eventually be sent to collections, and your creditor could pursue a court order for wage garnishment. The maximum possible wage garnishment for consumer debt may depend on the rules in your state.

  Unpaid taxes

The IRS may pursue wage garnishment if your tax bill remains unpaid for too long, and they won’t necessarily have to get a court order to do so. The amount you owe will depend on your disposable income and how many dependents you claim on your taxes. Before garnishment, the IRS will send notices including a Final Notice of Intent to Levy.

  Student loan debt

Federal student loans in default can be subject to wage garnishment, as your lender can require your employer to garnish your wages. The limit for federal student loan garnishment is 15% of your disposable pay. This is another situation in which garnishment doesn’t necessarily involve or require a court order.

Limits to garnishment of wages

Debtors have some protections against garnishment, due to state and federal regulation of the practice. Debt can only be garnished up to a certain amount as a percentage of disposable income.

State rules

While some national laws limit garnishment, there’s a good chance that your state law may limit it further. Those federal limits apply in some states (California, Texas and Ohio, for example).

But some states offer additional protections. For example, South Carolina bans consumer debt garnishment entirely. Massachusetts has much lower limits, and Florida only allows one garnishment per person — and there’s also an exception for certain heads of households.

Research garnishment rules in your state to determine what your particular limits may be.

Federal rules

The Consumer Credit Protection Act sets specific limits on wage garnishment for all Americans.

• Child support: Up to 50% of disposable earnings if the debtor is supporting another spouse or child; otherwise, it’s up to 60%. 5% more may be garnished if the support payments have been in arrears for over 12 weeks.
• Consumer debt: Whichever is lower between 25% of disposable earnings or the amount which disposable earnings are greater than 30 times the federal minimum wage (currently $217.50 weekly).
• Student loan debt: Up to 15% of disposable earnings, per the Higher Education Act (HEA) of 2018, which grants the Department of Education the ability to garnish wages for unpaid student loan debt.

Notably, the IRS doesn’t have to abide by these limits while garnishing wages for back taxes. Those limits are determined by your filing status and number of dependents. Depending on how much you earn and owe, the garnishments could be a significant percentage of your disposable income.

Federal law also protects you from being fired for a single garnishment (you don’t have that protection under multiple garnishments).

Dealing with a wage garnishment

It’s possible to contest court rulings that order wage garnishment. Those court orders come with instructions on how to challenge them, but you may only have a few days to gather documents and do so. You could also file a Claim of Exemption — there are certain kinds of income you may be able to protect from garnishment.

Even if you’ve received a court-ordered wage garnishment, you have some options for how to move forward. Working out a payment plan with your creditors may be preferable than wage garnishment, so it’s best to do so before they get a court order against you. But, even if you’ve started having wages garnished, you still might be able to work out a deal.

You could also pay off delinquent debt by taking out an additional debt consolidation loan. However, depending on your credit score, the interest rate and monthly payments for that debt could be quite high. Only finance debt if you know you’ll be able to afford those payments; otherwise, you could fall deeper into debt if you take out loans to pay existing debt but can’t repay the new loans.