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 limits 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. The wage garnishment laws in Ohio are generally the same as federal wage garnishment laws. But Ohio law also protects you against garnishment if you enter into an agreement for debt scheduling; that is, you enter into an agreement with a nonprofit debt counseling service and agree to pay them a portion of your income. The service then makes payments to your creditors until your debts subject to the agreement are paid off. (See below for more information on how debt scheduling works).
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, federal law places limits on wage garnishment amounts. While states are free to impose stricter limits, Ohio's wage garnishment laws are generally the same as federal law. On a weekly basis, the garnishment can't exceed the lesser of:
In addition, in Ohio, a wage garnishment isn't allowed for any debt that's the subject of a debt-scheduling agreement between the judgment debtor and a budget and debt counseling service unless:
Generally, under an agreement for debt scheduling, you regularly pay a portion of your income to a budget and debt counseling service, which makes payments to your creditors until your debts subject to the agreement are paid off.
In Ohio, "debt scheduling" means counseling and assistance provided to a consumer by a budget and debt counseling service under all of the following circumstances.
Under Ohio law, a "budget and debt counseling service" means a nonprofit corporation that counsels consumers about their financial obligations and assists them in dealing with their creditors. (Ohio Rev. Code Ann. § 2716.03.) Here are a few ways you might go about finding a nonprofit budget and debt counseling service:
Legitimate debt counseling organizations offer financial help for free or at a minimal charge. But you should avoid for-profit debt relief services. Often, the for-profit companies that purport to provide debt relief services are scammers; you'll get little or no help after you've agreed to pay them. All too often for-profit debt relief companies charge high fees for services you could do yourself, hurt your credit, drop the ball when it comes to actually performing the services, or simply take off with your money. Even if a debt relief company does try to help you, you'll have to pay a lot for services that you could do yourself or would be better off paying to an attorney or a nonprofit budget and debt counseling service.
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. Idaho state law follows this federal law. (15 U.S.C. § 1673). Ohio has no additional withholding limits for child support other than those that federal law prescribes. (Ohio Rev. Code Ann. § 3121.03.)
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. Talk to an Ohio debt collection attorney to learn about local and state tax garnishment.
If you have more than one garnishment, the total amount is limited to 25% (unless one of the debts allows for a higher garnishment amount, such as child support). (15 U.S.C. § 1673(a).)
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. Property exemptions apply to more than just wages. Each state has a list of exemptions that a filer can use to protect property needed to maintain a home and employment, such as furniture, clothing, and a modest car. You'll find the assets listed in each state's exemption statutes. If you own an asset that appears on the list, you can exempt it.
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).
Similarly, under Ohio law, your employer can't discharge you solely because of a wage garnishment by a single creditor in any 12-month period. (Ohio Rev. Code Ann. § 2716.05.)
This article provides an overview of Ohio's wage garnishment laws. You can find more information on garnishment in general at the U.S. Department of Labor website. To find more about wage garnishment limits in Ohio, including the procedures that employers must follow in carrying out wage garnishment orders, check out the online Franklin County Law Library wage garnishment section.
For information specific to your situation or to get help objecting to a garnishment, contact a local debt relief attorney.