Colorado law limits how much a creditor can garnish (take) from your paycheck to repay debts. Colorado's wage garnishment limits are the same as those set forth by the federal government.
Read on to learn about wage garnishment (also called wage attachment) law in Colorado.
A wage garnishment or wage attachment is an order from a court or a government agency that is sent to your employer. It requires your employer to withhold a certain amount of money from your paycheck and then send this money directly to your creditor.
Different garnishment rules apply to different types of debt -- and there are legal limits on how much of your paycheck can be garnished.
To learn more about how wage garnishments work, how to object to a wage garnishment, and more, see our Wage Garnishment and Attachment topic.
Most creditors cannot get a wage garnishment order until they have first obtained a court judgment stating that you owe the creditor money. For example, if you are behind on credit card payments or owe a doctor’s bill, those creditors cannot garnish your wages (unless they sue you and get a judgment).
However, there are a few exceptions to this rule. Your wages can be garnished without a court judgment for:
There are limits to how much money can be garnished from your paycheck. The idea is that you should have enough left to pay for living expenses.
Federal law places limits on wage garnishment amounts. While states are free to impose stricter limits, Colorado has not done so. That means the federal law governs in Colorado. Federal law permits creditors to garnish the lesser of:
“Disposable earnings” are those wages left after your employer has made deductions required by law, such as income taxes and child support.
Example. Tina brings home $600 per week after taxes and other deductions. Lender has a judgment against Tina to collect on unpaid medical bills; Lender obtains a writ of garnishment. $600 per week is $382.50 more than $217.50, which is 30 times the minimum wage. 25% of $600 is $150. Because $150 is the lesser amount, Lender can only garnish $150 per week from Tina's wages.
Example. Larry works 40 hours per week at a minimum wage job; he only brings home $200 per week after his employer takes out taxes and court-ordered child support. Because this amount is less than $217.50 (30 times minimum wage), creditors cannot garnish Larry's wages.
If you owe child support, student loans, or taxes, the government or creditor can garnish your wages without getting a court judgment. The amount that can be garnished is different too.
Since 1988, all court orders for child support include an automatic income withholding order. The other parent can also get a wage garnishment order from the court if you get behind in child support payments. (To learn about income withholding orders and other ways child support can be collected, see Child Support Enforcement Obligations.)
Federal law limits what can be taken from your paycheck for this type of wage garnishment. 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 five percent may be garnished for support payments over 12 weeks in arrears. (Learn more about wage garnishment for child support arrears.)
If you are in default on a federal student loan, the U.S. Department of Education or any entity collecting for this agency can garnish your wages without first getting a court judgment – this is called an administrative garnishment. The most that the Department of Education can garnish is 15% of your disposable income, but not more than 30 times the minimum wage. To learn more, see the articles in Student Loan Debt.
The federal government can garnish your wages if you owe back taxes, even without a court judgment. The amount it can garnish depends on how many dependents you have and your deduction rate.
States and local governments may also be able to garnish your wages to collect unpaid state and local taxes. Contact your state labor department to find out more. (You will find a link to your state labor department below.)
If you have more than one garnishment, the total amount that can be garnished is limited to 25%. For example, if the federal government is garnishing 15% of your income to repay defaulted student loans and your employer receives a second wage garnishment order, the employer can only take another 10% of your income to send to the second creditor.
Complying with wage garnishment orders can be a hassle for your employer; some might be inclined to terminate your employment rather than comply with the order. State and federal law provides some protection for you in this situation.
According to federal law, your employer cannot discharge you if you have one wage garnishment. However, federal law won’t protect you if you have more than one wage garnishment order.
Some states offer more protection for debtors. In Colorado, your employer cannot fire you regardless of how many wage garnishments you have (although your employer can still fire you for other reasons).
To find more information about wage garnishment limits in Colorado, including the procedures that employers must follow in carrying out wage garnishment orders, check out the website of the Colorado Department of Labor and Employment at www.coworkforce.com.