Wage Garnishment For Credit Card Debt

American consumers owe $733 billion in credit card debt. The average household owes over $15,000 in such debt. And guess what? Of the hundreds of millions of people using credit cards, roughly six million are in over their heads. Many of them are even facing collection lawsuits and potential wage garnishment, among other things.

What is Wage Garnishment?

Wage garnishment is when a creditor takes part of your wages straight from your pay check.

Can Your Wages Be Garnished for Credit Card Debit?

Without question, your wages can be garnished for failure to pay credit card debt if you fall behind in your payments and allow the credit card company to obtain a judgment against you.

credit card debt

What Process Must the Credit Card Company Follow Before Garnishing Your Wages?

Unlike tax authorities, credit card companies cannot just attach your wages by sending a letter to your employer. They must first go to court and prove you are in default of your credit card payments.

Once the credit card company files a lawsuit against you for unpaid credit card debt, you will learn about it. The company’s lawyers will usually hire a process server to deliver the lawsuit to you personally. However, if they cannot find you, often because you have moved, they may obtain a default judgment.

As in any lawsuit, you have the right and opportunity to defend against the claims of the credit card companies, demand proof of the unpaid debt and amount, and raise defenses to collection, such as the statute of limitations.

If you have no defense, a judgement will be entered against you in the amount of the debt, interest, and court costs. This can be substantial, often double the unpaid amount on your credit cards.

Once the judgement is obtained against you, the creditor can start the judgement-enforcing process by garnishing your wages and levying on your bank accounts and other assets.

Can A Collection Agency Garnish My Wages for Unpaid Credit Card Debt?

Yes they can. It is common practice for credit card companies to bundle credit card debt then sell it off to debt collection companies at a discount. These companies then contact you directly in hopes you will pay the debt owed or some fraction thereof. Aggressive actions by debt collection companies have been the subject of extensive legislation at both the federal and state levels. If the collection company cannot get you to pay voluntarily, it can sue you in court just as if it were the credit card company itself. And if it obtains a judgement against you, like any other creditor it can garnish your wages.

Can You Stop the Wage Garnishment for Credit Card Debt?

Yes, you can stop a wage garnishment based on a judgement for unpaid credit card debt. The rules vary from state to state, but generally speaking, you have several options:

(1) You can contact the credit card company’s attorney and work out a settlement. Often the attorney will take pennies on the dollar, especially if you plead poverty and/or threaten bankruptcy, where appropriate.

(2) You can assert and prove any one of a number of exemptions or limitations. Exemptions and limitations vary from state to state, but all operate the same way: they preclude the creditor from garnishing all or part of your wages, depending on the exemption or limitation.

Some states have a “head-of-household" exemption that protects from garnishment a certain portion of the head-of-household’s wages. All states place a limitation of some kind on the amount of wages that can be garnished from anyone.

Standard exemptions include the following:

  • Social Security benefits
  • Child Support or Spousal Support / Alimony
  • Payments for Disability
  • Certain forms of Retirement

Four states – Pennsylvania, North Carolina, South Carolina and Texas – forbid garnishment of wages for any debt except those arising from delinquent federal or state taxes, child support, student loans that are federally guaranteed, and restitution or fines ordered by a court.

(3) You can seek the protection of the bankruptcy courts. When you file for bankruptcy, all collection actions such as wage garnishment are automatically stopped until the court can sort everything out.

How Much of Your Wages Can Be Garnished for Credit Card Debt?

Title III of the Consumer Credit Protection Act expressly limits the amount of wages that can be garnished from your wages, for debts based on credit card delinquencies or otherwise.

Generally speaking, the most that can be garnished from your wages is “25% of the employee’s disposable earnings, or the amount by which an employee’s disposable earnings are greater than 30 times the federal minimum wage (currently $7.25 an hour)," whichever is less.

It also prohibits an employer from firing you from your job due to the wage garnishment or hassles created thereby.

Will Bankruptcy Block the Garnishment of Wages for Credit Card Debt?

For all practical purposes, bankruptcy discharges unsecured credit card debt, whether reduced to a judgment or not. Once a bankruptcy is filed, any existing garnishment must cease by order of the federal bankruptcy court. Once your debts are discharged, no further garnishment on those debts can take place, with a few exceptions, such as fraud on the creditors and court.

In conclusion, keep acutely in mind that wage garnishment laws and exemptions for credit card and other debt vary from state to state. Of course, whenever a lawsuit has been filed against you, it is wise to at least consult with qualified debtor-creditor or bankruptcy counsel and get their advice.


Federal Law:

U.S. Department of Labor, Wage and Hour Division, Fact Sheet #30: dol.gov/whd/regs/compliance/whdfs30.pdf

Online Resources:

Bankruptcy to Discharge Credit Card Debt: alllaw.com/articles/nolo/bankruptcy/getting-rid-credit-card-debt.html

By State: fair-debt-collection.com/state-wage-garnishments.html

Household Credit Card Debt: nerdwallet.com/blog/credit-card-data/average-credit-card-debt-household/

Wage Garnishment for Credit Card Debt: nolo.com/legal-encyclopedia/can-credit-card-companies-garnish-wages.html

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