Garnishment

What is “Garnishment”? 
 

Garnishment refers to the process where money is legally withheld from an individual’s paycheck and is sent to another party to pay for unpaid debt. Usually, the individual’s employer is the third party who is in charge of withholding a percentage of wages until the debt is paid off.

To help in understanding further, let’s define some terms involved in the garnishment process:

• Debtor – the employee or individual who owes money.
• Creditor– the one to whom the debtor or garnishee owes money; A creditor initiates garnishment proceedings.
• Garnishee – the third party, usually the debtor’s employee, who deducts payments from the debtor’s wages. 

Common examples of unpaid debts are unpaid taxes, medical bills, delinquent credit card loans, defaulted student loans, and child support payments. Most garnishments are made via a court order. However, the Internal Revenue Service (IRS) and Department of Education may garnish wages without filing a lawsuit or getting a court order. These are for back taxes and student loan debts. 

Is there another name for garnishment?
 

Yes, it is also called “wage garnishment.”

What type of wages can be garnished?
 

A debtor’s wages that can be subject to garnishments include an employee’s pay plus any bonuses or commissions received. However, tips from customers are not considered part of an individual’s disposable earnings so these cannot be garnished. 

The amount of pay that is subject to garnishment will be based on the employee’s disposable earnings. Disposable earnings or disposable income is the money that is left after deducting government-mandated taxes. 

Is there a limit to the amount of disposable earnings that can be garnished? 
 

Yes, there is a limit to the amount of income that can be deducted or garnished from a debtor’s disposable earnings dictated by the Consumer Credit Protection Act. The limitations are not uniform to all garnishments, though. The limitations will depend on the type of debt. 

For ordinary garnishments, meaning those that are not for support, bankruptcy, or any state or federal tax, it cannot exceed 25% of the debtor’s disposable earnings or the amount by which the employee’s disposable earnings are greater than 30 times the federal minimum wage which is $7.25 an hour.

Additionally, there are also limitations on the amount that can be garnished for child support and alimony. For these types of debt, the garnishments can be up to 50% of a debtor’s disposable earnings if they are supporting another spouse or child. However, garnishment can. be up to 60% if the debtor is not supporting another spouse or child.

Is it possible to stop a garnishment? 
 

Yes, there are several ways by which a person can stop garnishments even after they start. 

• Challenge the garnishment. Once a court orders garnishment, a debtor can object to garnishment in writing and send it to court. 
• Negotiate with the creditor. The debtor can continue negotiations with the creditor even after the garnishments have started. The debtor can propose a new payment plan if the circumstances have changed. For example, if the debtor found the means to pay a lump sum for the debt due, they can negotiate with the creditor to stop garnishing from their wages. 
• File for bankruptcy. When the debtor files for bankruptcy, the garnishment process can stop for certain debts. However, exceptions can be debt for child support and alimony. While bankruptcy can stop garnishment for some debts, resorting to this option may place property items on the line. 

How long does it take before a garnishment takes effect? 
 

The exact time for a garnishment order to take effect may be different for each case. Once a court order for garnishment is issued, a judge may order the creditor to send a notice to the debtor about the garnishment process. Usually, there is a two-week interval before garnishing can commence. 

Are there U.S. states that do not allow garnishment? 
 

Although there are federal wage guidelines, state laws on garnishment can vary. There may be some U.S. states that offer additional protections or exemptions. There are U.S. states where wage garnishment for consumer debt is not permitted. These four states are North Carolina, South Carolina, Pennsylvania, and Texas.