Wage Garnishment Orders Cannot Garnish It All

Wage garnishment automatically takes a set amount of money from a person’s paycheck and sends that money directly to another party. Wage garnishment generally requires a court order, though government agencies (such as the IRS or Department of Education) can often garnish wages for unpaid taxes or student loans administratively without a court hearing. The court order can deduct a certain amount of money from every paycheck, but it cannot deduct the full amount. Generally, wage garnishment can only come out of your disposable earnings.

The specifics of wage garnishment orders depend on state law. If you have a wage garnishment order and do not have enough money to provide for your needs, talk to a wage law attorney for legal advice.

Understanding Wage Garnishment

Most wage garnishment involves a court order to pay for debts or outstanding obligations. The court order requires an employer to withhold a certain amount of money and direct that money to the creditor or government agency. Almost any type of earnings is subject to wage garnishment. This includes commissions, workers’ compensation, and severance pay. Wage garnishment can involve any type of financial debt, including:

• Federal student loans
• Credit card debt
• Child support payments
• Consumer debt
• Medical debt
• IRS income tax or state tax debts

Wage garnishment can continue until full repayment of the debt. However, garnishment orders cannot take all your income. State and federal laws limit what income is subject to withholding, the maximum garnishment, and exemptions to garnishment.

Legal Limits on Wage Garnishment

The federal government and every state also have statutes regulating wage garnishments. Federal wage garnishment limits do not apply to certain state and federal tax debts and bankruptcy orders. For ordinary debts, federal and state laws can determine:

• When employers can garnish wages
• The maximum amount of money taken per pay period
• Income subject to a garnishment order
• Legal protections against termination because of a garnishment order

The Consumer Credit Protection Act (CCPA) limits how much an employer can withhold from your earnings under federal law. The amount of garnished wages is based on your disposable earnings. Disposable income means the income left after mandatory taxes and deductions.

The maximum amount per pay period for ordinary garnishment is up to 25% of your disposable income or the amount by which your disposable earnings exceed 30 times the federal minimum wage ($7.25 per hour), whichever is less.

In cases of child support or spousal support, the court may order up to 50%. For support orders for an additional child or spouse, garnishment can take up to 60% of disposable income. If child support is more than 12 weeks past due, garnishment can take an additional 5% of disposable income.

Exempt Income from Garnishment

Disposable earnings do not include the mandatory payments that already come out of your paycheck. Mandatory deductions include state, federal, and local taxes and payroll taxes (Social Security, Medicare, and unemployment insurance). Deductions also include required retirement withholdings. However, required deductions do not include optional withholdings, like optional retirement benefits.

States may provide additional exemptions for income not available for garnishment. Depending on the state, types of wage garnishment exemptions can include:

• Social security benefits
• Workers’ compensation benefits
• Medicare and Medicaid benefits
• Disability benefits
• Unemployment benefits
• Veteran’s benefits

How Garnishment Orders Are Processed

Wage garnishment starts with getting a writ of garnishment from the court. Garnishment orders can come from the civil court, tax court, or family law court. A creditor serves the court order on the employer of the person whose wages are being garnished. Employers must enforce garnishment orders, even if they come from another state.

State law requires employers to begin garnishment within a certain amount of time from getting notice of the court order. The employer deducts the garnished amount from the employee’s earnings and forwards those payments to the creditor or government agency.

Protecting Yourself from Excessive Garnishment

If your employer is taking too much from your earnings, you may find it difficult to provide for your basic needs. To challenge the amount of debt, you need to deal with the creditor. If your creditor already has a judgment, it can be more difficult to dispute the debt. You can also try negotiating with the creditor to settle the debt with a payment plan or lump sum payment.

Another option is to file for bankruptcy. Filing for bankruptcy generally puts an immediate stop to most collection actions, including garnishment orders, due to the automatic stay. However, some debts, such as child support, may not be affected by the automatic stay. Bankruptcy could help you clear your debts or reorganize debts to make a new start. However, bankruptcy does not erase all debt. For example, child support and student loans are not discharged in bankruptcy.

An attorney can help you challenge the alleged debt to reduce the amount of garnishment. Your attorney can also negotiate with your creditors to reduce your debt so you can keep more of your income. For legal advice about limiting how much your employer can garnish from your earnings, talk to a wage law attorney.