Wage garnishment is a legal procedure where a portion of an employee’s earnings are withheld for payment of a third-party debt. Although other types of assets (such as bank accounts) can be garnished, wage garnishment is by far the most frequently used type of garnishment in the United States. Wage garnishments are different from voluntary wage assignments, where a debtor agrees to have a certain amount deducted from their paycheck to pay a creditor.
Wage Garnishment Procedures
In most cases, a court order (or “Writ of Garnishment") is required for a payroll garnishment to take place, although the Internal Revenue Service (IRS) can garnish your wages for unpaid federal taxes without going through a court.
Garnishment law applies on both the federal and state level. Although the specifics can vary per differing state garnishment laws, garnishment is legal in all 50 states as well as Washington D.C. and other U.S. territories.
In most states, garnishments can be used to recover debts of any type, including credit card and other commercial debts. However, in four states – Texas, Pennsylvania, and North and South Carolina – your wages can only be garnished for debts from delinquent taxes, child support, (federally-guaranteed) student loans, and fines that were ordered by the court. In addition, Florida wage garnishment laws provide a “head-of-household exemption" that prohibits the wage garnishment of someone who supplies at least 50% of the support for a child or other dependent.
If your employer receives a garnishment order, they must notify you, send the garnished money to the creditor, and provide you with information on how the payroll garnishment can be disputed. They are required by law to adhere to the garnishment.
Stopping Wage Garnishment
In order to stop wage garnishment, you must file papers with the court that issued the garnishment and appear at a hearing. You’ll be expected to provide evidence as to how the wage garnishment prevents you from paying your basic living expenses. The judge will then decide whether to reduce or eliminate the garnishment or to leave it in place as is. In general, it’s easier to avoid wage garnishment (for example, by negotiating with creditors to make payments on a debt) than it is to get a garnishment dismissed after-the-fact.
The Consumer Credit Protection Act
Title III of the Consumer Credit Protection Act (CCPA) governs wage garnishment on a federal level, and applies to everyone who receive personal earnings (wages, salaries, commissions, etc.) as well as their employers.
Under the CCPA, the maximum amount of wages that can be garnished is the lesser of either 25% of the employee’s “disposable income" (the amount left over after legally-required deductions, such as taxes) or the amount by which disposable earnings exceed 30 times the current minimum hourly wage (in 2011 this amounts to $217.50.) There are some exceptions to this rule for garnishments related to bankruptcy, child support, and state or federal taxes.
In instances where multiple garnishments have been ordered, that can’t be satisfied under the maximum amount allowed by law, federal tax garnishments will have first priority, followed by local tax garnishments and then all others.
Title III of the CCPA also prohibits your employer for terminating you if your earnings have been subject to garnishment for any one debt. However, it doesn’t prevent the discharge if you’ve had your wages garnished for multiple debts. Some state laws provide additional protection.
The CCPA does have a somewhat limited scope. In general, issues regarding garnishment or garnishment-related termination would be handled by the court or agency that initiated the garnishment.
When state laws differ from the CCPA, the law resulting in the lesser garnishment, or prohibiting the employee’s dismissal, must be observed.
Questions regarding wage garnishment should be handled by an attorney experienced in these matters.