In Illinois, like all other states in the United States, creditors can garnish wages to satisfy their debts. The Illinois state statute that governs the wage garnishment process is referred to as 735 ILCS 5/ Code of Civil Procedure of the Consolidated Statutes of Illinois.
Laws Governing Wage Garnishment in Illinois
The U.S. legal system works as a form of “federalism." This means that every kind of debt there is – whether based on credit cards, medical services, unpaid federal or state taxes, child or spousal support, educational loans, or otherwise – finds roots in both federal and state law. For a creditor seeking to enforce a debt in Illinois, this means we must refer to any federal or state Illinois law that addresses Wage Garnishments and limitations thereon. And because of “federalism," if federal law wants to have the final word on the subject, it can defer to state law or assert its supremacy as the law of the land.
Situations to Which Wage Garnishments Apply
Irrespective of the state in which it takes place, the wage garnishment process at core is a legal tool used by creditors to collect unpaid debts. The particular aspect of wage garnishment, as opposed to other forms of debt collection, is that a monetary debt must be owed, the creditor must usually first file a lawsuit and obtain a Money Judgment, and the Money Judgement must be converted into a Wage Garnishment Order.
By its nature, a Wage Garnish presupposes an employed debtor, because a Wage Garnishment Order seeks to attach a debtor’s wages and pay them over to the creditor. A Wage Garnishment order has no power as against an unemployed debtor or a debtor who works as an independent contractor, freelancer, or self-owned business (unless the owner employs himself, a status which he can then change to avoid the garnishment). In other words, a Wage Garnishment Order only reaches currently employed individuals paid through W-2s.
How the Wage Garnishment Process Works
Because it is so often used, the Wage Garnishment process is a simple one. Generally it commands the employer to take part of an employee’s regular wages and pay that part over to the creditor to satisfy the Judgment (and underlying debt) identified in the Garnishment Order. The Order must be taken seriously by the employer, because failure to comply can subject the creditor to fines or worse. On the other hand, the creditor cannot over-attach wages, either. The employer’s obligation is exacting: it must garnish exactly what the law and order allows, not a penny more and not a penny less.
Limitations on Wage Garnishment in Illinois
In the absence of legally-imposed limitations, a creditor could garnish or attach 100% of a debtor’s wages, leaving him and his family with nothing to live on. Since creditors can get very aggressive, if society did not provide debtors with protection from garnishment, a creditor could push so hard the debtor would not be able to keep a roof over his head and food on the plate for his family, turning him into a recipient of welfare benefits. As a result, public policy compassionately protects debtors by applying concepts of hardship. In Illinois, some of these protections come from federal law, and some originate from Illinois’ own state laws.
Under federal law – specifically, the Consumer Credit Protection Act – the most that a typical creditor can garnish from an employee’s pay check is subject to what is called “the 25-30 Rule." Under the “25 Rule," the most the creditor can take is 25% of the employee’s “Disposable Earnings." “Disposable earnings" are gross wages less deductions allowed for things like withholding, SSI, and union dues. Private components like insurance premium deductions generally cannot be deducted to calculate “Disposable Earnings."
Under the alternative “30 Rule," the creditor can only take amounts above 30 times the federal minimum wage. Amounts up to 30 times minimum wage, are therefore exempt. Ever since July 2009, the federal minimum wage has been $7.25 per hour for employees with medical insurance premiums being automatically taken out of their paycheck, and $8.25 for employees without such premiums being automatically deducted. No matter which rule is applied, under the supreme mandate of federal law, the creditor is only entitled to garnish the lesser of the two of the two formulas.
Illinois State Law Protections
Because the federal law has been crafted as a form of minimum protection, Illinois has provided its debtor-employees greater protection what the federal “25-30 Rule" provides. In Illinois, if an employee earns less than $371.25 per week (or $1484.96 over four weeks), a consumer creditor cannot garnish any of his wages. Otherwise the consumer creditor – credit card, revolving credit, medical bills, etc. – can only take 15% of an employee’s “Disposable Earnings" as that phrase is defined under federal law. In essence, therefore, Illinois has adopted a “15% Rule," providing its employed debtors far more protection from garnishment than is provided by federal law.
Situations Where Illinois Does Not Require the Creditor to Have a Money Judgment to Effect Wage Garnishment
Though normally a creditor must first obtain a Money Judgment to garnish wages, some credits can proceed administratively, thus saving hassle, time, delay and expense. Here is a non-exclusive list of debts that may not require a Money Judgment and that can instead be enforced with an administrative wage attachment order:
- Court-ordered and past due child support
- Alimony or spousal support that is past due
- Federal, state and local fines
- Income taxes arrearages at the federal or state level
- Property taxes due at the state level
- Defaulted student loans.
Special Treatment of Child Support and Alimony
It’s been over three decades now since all U.S. court orders for child support and alimony (or spousal support) have automatically allowed for wage garnishment of the paying spouses wages. For current support, as with consumer debts, federal law limits the amount garnished to the previously-discussed “25-30 Rule." However, where support payments are past due, that is a different story. For past due support, up to 60% of wages can be garnished unless another dependent is being supported, in which case the maximum is 50%. And if the debtor is in arrears more than twelve (12) weeks, an additional five percent (5%) can be tacked on. This means that, in the more severe cases, as much as sixty-five percent (65%) of that employee’s “disposable earnings" can be garnished for support.
Special Treatment of Student Loans and State Taxes
The U.S. Department of Education is empowered to collect student loans. If a student loan falls into default, the DoE may issue an administrative wage garnishment (remember, no Money Judgement is required). However, the most that the DoE can garnish is 15% of your “Disposable Earnings," or more than 30 times the minimum wage. You could look at this as a “15-30 Rule."
Other Debts Receiving Special Treatment
Many debts receive special treatment under federal law and are deemed exempt from any form of wage garnishment. These include:
- SSI Benefits
- Unemployment Insurance Benefits
- Veteran’s Benefits
- Certain Military Pensions
- Public Assistance Payments
- Disability Compensation
- Worker’s Comp
- Railroad and Black Lung benefits
Special Rules for Bankruptcy and Federal IRS Tax Debts
The Court in Chapter 7 bankruptcy proceedings, or the trustee in a Chapter 13 reorganizations, as a theoretical matter can reach as much as ninety percent (90%) of an employee’s “disposable earnings"…though hardship is always taken into account. Similarly, the IRS can garnish as much as seventy percent (70%) of an employee’s wages after applying a complicated formula where hardship is also taken into account.
Priority as Between Multiple Income Garnishments
When the debtor-employee faces multiple types of garnishment orders, the employer must first prioritize certain debts over others. Generally, the order of priority runs as follows: past due child support always comes first, followed next by past due federal income taxes, then defaulted student loans, bankruptcy payments, and state levies. All of these come before consumer debt, credit cards, pay day loans, even medical liens, and it is the type of debt, not the timing or order of garnishment that controls.
Illinois Job Protection for Wage Garnishment Process
Some employers, especially smaller ones, would rather fire the employee than deal with the hassle and complications of the wage garnishment process. Under both federal and Illinois law, this is prohibited and a violative employer can be subject to liability, fines or criminal penalty.
Like so many debt collection laws, Illinois wage Garnishment law can be simple in some situations and complicated in others, depending on the amount involved, type of debt, number or attachments, and other factors. If most situations, you are wise to give yourself peace of mind by consulting with a qualified debtor-creditor, legal, or tax professional.
Illinois General Assembly, Illinois Compiled Statutes, Civil Procedure, 735 ILS section 5, http://www.ilga.gov/legislation/ilcs/ilcs4.asp?DocName=073500050HArt.+XII+Pt.+8&ActID=2017&ChapterID=56&SeqStart=93100000&SeqEnd=95200000
Legal Aid – Stopping Garnishment: https://www.illinoislegalaid.org/legal-information/wage-garnishment-basics
Title II of the Consumer Credit Protection Act, 15 U.S.C. Section 1671 to 1777 (garnishment orders)
The Federal Wage Garnishment Law, Title III of the Consumer Credit Protection Act, 15 USC 1671 et seq., https://www.dol.gov/whd/regs/statutes/garn01.pdf
United States Department of Labor, Wage and Hour Division, Federal Wage Garnishments, https://www.dol.gov/whd/garnishment/
United States Department of Labor, Summary of Major Laws of the Department of Labor, https://www.dol.gov/general/aboutdol/majorlaws
Fair Labor Standards Act, as amended, Public Law 99-150, enacted on November 13, 1985, amending the Fair Labor Standards Act, https://www.gpo.gov/fdsys/pkg/STATUTE-99/pdf/STATUTE-99-Pg787.pdf