Sometimes, you’ll see it coming and sometimes you won’t. It’s payday and either you’re being handed an old-fashioned pay check or you get an email notifying you of a direct deposit into your bank account. Either way, you do a double-take because your net pay after withholding is much less than usual.
There must be a mistake here, you think. Or you know exactly why: a creditor only recently obtained a money judgment against you for unpaid medical bills for an injury your spouse suffered last year with a massive premium you couldn’t afford to pay then or now.
Still, you can’t believe it, because what’s happened is that your wages have been garnished. You’ve heard about it before, but until now you’ve never experienced the sting of the wage garnishment first hand, and boy, howdy, to quote your mom, who was born in Texas, it’s a doozy.
Twenty-five percent of your take-home pay is gone, missing, cut from the total, leaving you just $300 net for the whole week. So right away you ask a fellow employee who had his wages garnished (something you learned over a beer the week previously after work), to meet you for drinks again.
There she gives you the low down. “There’s a federal law” – she stops and googles into her phone – “yes, right here. There’s a federal law called the Consumer Credit Protection Act that limits what they can take to 25%, which is why you got $300 and not some other figure.”
She pulls the phone closer to her eyes, “but wait, in New Hampshire they can’t take any of 50 times minimum wage, which is only $7.25 an hour, as we both know.” They laugh at the paltry sum and she continues. “But still, fifty times $7.25 equals $362.50, meaning legally they could only take $37.50.”
“But they took $100,” you say.
“Friend, they’ve taken too much, because they can only take the lesser of two,” which is great but still your stomach sinks because you’re thinking they’ll take another bunch next week and so forth and so on for the next two years, because that’s how much you owe.
“But there’s more good news, your friend says. You listening?”
And indeed you are.
“New Hampshire here has special rules for folks like us.”
“You don’t say.”
“Yes, in New Hampshire, that medical provider—”
“The collection agency, you mean.”
“Yes, whoever, they have to file a new lawsuit for each week they want to garnish that $37.50 once you get the amount straightened out, and right here it says most creditors just won’t do it because the lawyers cost so much.”
“Which would explain,” you say, “why they keep calling me and asking me to call them back so we can work out a repayment plan.”
“That’s right,” your friend says. “You caught a break. The great state of New Hampshire protects its own, much more than other states. Now call a professional for help or call them yourself and work out a good deal, one you can afford.”
“Great advice, friend!” you say. “Cheers!”
And that’s a fun example of the extra-protective law in New Hampshire when it comes to wage garnishments. Unlike other states, in New Hampshire employee-debtors get the best of the 25% rule and the 50x rule, and creditors must file and refile to attach wages, which is quite cost prohibitive.