A wage garnishment allows a creditor to take payment directly from your paycheck when you owe a debt. For instance, a creditor can take steps to force repayment for debts such as:
Before the creditor can garnish your wages, most must sue you, get a money judgment, and obtain a court order. But there are exceptions. Read on to learn more about who can garnish your wages and what that creditor must do before starting a wage garnishment.
A wage garnishment (or wage attachment) is a court or government agency order that requires your employer to withhold a certain amount from your wages and to send it to your creditor. The percentage of wages that a creditor can garnish depends on the type of debt as well as federal and state garnishment limits (discussed below).
Generally, any creditor can garnish your wages. But some creditors must meet more requirements before doing so. Specifically, most must file a lawsuit and obtain a money judgment and court order before garnishing your wages.
However, not all creditors need a court order. It depends on the type of debt.
For most types of debt such as credit cards and medical bills, the creditor can't immediately garnish your wages if you stop paying your bill. The creditor must first sue you, obtain a judgment, and get a court order.
Example. While employed, Krista's yearly raises didn't keep up with the increasing cost of her living expenses. Forced to make choices, she decided to stop paying her credit card bill. A few months later, she was served with a collection lawsuit seeking damages in the amount of her credit card debt plus other costs. After going through the court process, the credit card company proved that Krista owed the debt at a court trial in front of a judge. The court awarded the credit card company a money judgment for the amount owed. The credit card company used the money judgment to get a court order directing Krista's employer to deduct money from her paycheck.
If a creditor obtains a court order to garnish your wages, federal law limits the amount that can be taken to 25% of your disposable earnings or the amount by which your weekly disposable income exceeds 30 times the federal minimum wage, whichever is lower.
However, keep in mind that your state is allowed to impose even stricter limits. You can learn more about how wage garnishments work and the garnishment limits of your state in Wage Garnishment and Wage Attachment.
Not all creditors have to go through the trial process before garnishing wages. The following debts are considered important enough to have special rules that help creditors expedite the collection process.
All child support orders automatically include a wage withholding order. If you're ordered to pay child support, your wages can be garnished without additional court action. A wage garnishment order can also be obtained against you if you fall behind on your child support or alimony obligations.
Wage garnishment limits for child support and alimony are much higher than for other types of debts. For child support obligations, federal law allows garnishment of up to 50% of your disposable earnings (gross wages less deductions required by law) if you are supporting a spouse or child who isn't the subject of the wage garnishment order. If you don't have another spouse or child to support, this amount can be 60%. Further, the garnishment may be increased by an additional five percent if you are behind 12 weeks or more on your obligations.
If you owe back taxes to the IRS, the federal government can garnish your wages without having to obtain a court order against you. How much the IRS can garnish depends on the number of dependents you have and your deduction amounts. (Learn about your tax options.)
State and local governments can also garnish your wages to collect unpaid taxes. But the amount they can garnish and procedures they must follow depend on state law. To find out more about wage garnishment limits for unpaid state and local taxes in your area, contact your state labor department.
If you're behind on your federal student loan payments, the U.S. Department of Education (or any entity collecting on its behalf) can garnish your wages without a court order. this is referred to as an administrative garnishment. The amount of the garnishment is limited to 15% of your disposable earnings or the amount by which your weekly disposable wages exceed 30 times the federal minimum wage, whichever is less.
It can be challenging to make ends meet when a wage garnishment reduces your paycheck. The good news is that you have options. For instance, you might be able to:
You can learn about these options by contacting an attorney or reading more in Using Exemptions to Protect Your Wages From Garnishment.