In many ways, North Carolina is just like any other state when it comes to wage garnishments. Delinquent federal and state taxes, ongoing and past due child support and alimony, and defaulted student loans – all can result in significant wage garnishments from debtor-employee paychecks. But for consumer loans and a few other debts, North Carolina is a debtor’s safe haven, so to speak.
All those non-consumer debts don’t require the filing of a lawsuit and don’t require a money judgment for a wage garnishment to result. All the IRS, custodial spouse, and Department of Education lender must do is serve the defaulting debtor’s employer, and bam, the garnishment comes down. Protections do exist, but the IRS can take up to 90% of disposable wages, the family court can order as much as 65% of wages withheld, and student loan lenders can grab 15%. It can be very harsh.
But for consumer debts, things are different. Basically, anything that falls outside the tax-child-education debt triumvirate. For these consumer debts, there are significant federal protections in place pursuant to the federal Consumer Credit Protection Act, which (generally speaking) protects at least 25% of disposable wages (these being wages left after standard deductions).
Though debtor’s wages cannot be garnished in North Carolina for consumer wages, their bank accounts can be garnished. What this means for debtors is that they must be sure to protect their wages from reaching any bank account where that money can be reached. So in this sense, the protection is only a partial one at best.
And do remember, the debts are still owed, so the best thing to do is consult a professional or make an effort to reach repayment terms. Only in this way can true peace of mind be obtained. Here is where you can learn more about North Carolina wage garnishment laws and its other special nuances.