A "wage garnishment," sometimes called a "wage attachment," is an order requiring your employer to withhold a certain amount of money from your pay and send it directly to one of your creditors. In most cases, a creditor can't garnish your wages without first getting a money judgment from a court. For instance, if you're behind on credit card payments or owe a doctor's bill, those creditors can't garnish your wages unless they sue you and get a judgment. Some creditors, though, like those you owe taxes, federal student loans, child support, or alimony, don't have to file a suit to get a wage garnishment. These creditors have a statutory right to take money directly out of your paycheck.
But creditors can't seize all of the money in your paycheck. Different rules and legal limits determine how much of your pay can be garnished. For example, federal law places limits on how much judgment creditors can take. The garnishment amount is limited to 25% of your disposable earnings for that week (what's left after mandatory deductions) or the amount by which your disposable earnings for that week exceed 30 times the federal minimum hourly wage, whichever is less. (15 U.S.C. § 1673). Some states set a lower percentage limit for how much of your wages are subject to garnishment. New Jersey's wage garnishment laws are stricter than federal wage garnishment laws. For the most part, creditors with judgments can take only 10 to 25% of your wages. But a few types of debts, you might lose more of your paycheck to garnishment.
The creditor will continue to garnish your wages until the debt is paid off, or you take some measure to stop the garnishment, such as claiming an exemption with the court. Your state's exemption laws determine the amount of income you'll be able to retain. Depending on your situation, you might be able to partially or fully keep your money. You can also potentially stop most garnishments by filing for bankruptcy.
Again, under federal law, a judgment creditor can garnish the lesser of:
In New Jersey, $48 is exempt. (N.J. Stat. Ann. § 2A:17-50). Also, under New Jersey law, a creditor may only garnish:
Military pay and benefits are exempt from garnishment in New Jersey.
If you owe child support, federal student loans, or taxes, the government or creditor can garnish your wages without getting a court judgment for that purpose. The amount that can be garnished is different than it is for judgment creditors, 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.
Federal law limits this type of wage garnishment. Up to 50% of your disposable earnings may be garnished to pay child support if you're 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're more than 12 weeks in arrears. (15 U.S.C. § 1673, N.J. Stat. Ann. § 2A:17-56.9).
If you're in default on a federal student loan, the U.S. Department of Education or any entity collecting for this agency can garnish up to 15% of your pay. (20 U.S.C. § 1095a(a)(1)). This kind of garnishment is called an "administrative garnishment." But you can keep an amount that's equivalent to 30 times the current federal minimum wage per week. (Remember, federal law protects the level of income equal to 30 times the minimum wage per week from garnishment.) (15 U.S.C. § 1673).
The federal government can garnish your wages (called a "levy") if you owe back taxes, even without a court judgment. The weekly exempt amount is based on the total of the taxpayer's standard deduction and the aggregate amount of the deductions for personal exemptions allowed the taxpayer in the taxable year in which such levy occurs. Then, this total is divided by 52. If you don't verify the standard deduction and how many dependents you would be entitled to claim on your tax return, the IRS bases the amount exempt from levy on the standard deduction for a married person filing separately, with only one personal exemption. (26 U.S.C. § 6334(d)).
States and local governments might also be able to garnish your wages to collect unpaid state and local taxes. Contact your state labor department to find out more.
If you receive a notice of a wage garnishment order, you might be able to protect or "exempt" some or all of your wages by filing an exemption claim with the court or raising an objection. The procedures you need to follow to object to a wage garnishment depend on the type of debt that the creditor is trying to collect, as well as the laws of your state.
You can also stop most garnishments by filing for bankruptcy. Your state's exemption laws determine the amount of income you'll be able to keep.
Complying with wage garnishment orders can be a hassle for your employer; some might prefer to terminate your employment rather than comply. Federal law provides some protection for you in this situation. Under federal law, your employer can't discharge you if you have one wage garnishment. (15 U.S.C. § 1674).
Also, under New Jersey law, your employer can't fire you because of a wage garnishment order. (N.J. Stat. Ann. § 2A:17-56.12).
This article provides an overview of New Jersey's wage garnishment laws. You can find more information on garnishment in general at the U.S. Department of Labor website. For information specific to your situation or to get help objecting to a garnishment, contact a local debt relief attorney.