Garnishing wages is the act of withholding a specific amount of money from someone's paycheck to pay back a debt that they owe and have failed to repay. If you are experiencing wage garnishment, it means that a debt collector of some sort will be taking money from your wages until your debt is repaid.
The amount of money that could be taken due to wage garnishment will vary depending on the type of debt you owe. Many types of debts can only utilize wage garnishment as a tool if allowed by a court order. However, some types of debts such as tax debt or student loans do not need a judge to grant the request to garnish your wages.
Once a creditor gets a court order to garnish your wages, or in cases where a court order is not needed, the creditor will send a notice to your employer or your bank. Often, your employer will simply remove the garnishment amount during the payroll process, so once your wages hit your bank account, they will reflect a deduction due to wage garnishment.
Different types will have different requirements and stipulations around the percentage of your wages they can take, and the timing will vary depending on how much debt is owed. Your state laws will also impact the wage garnishment process; some states may offer tighter protections around limits or feature exemptions in some instances.
ADP, which is a large payroll processor in the United States, found through a study that 7.2% of 13 million employees had experienced wage garnishment in 2013. Anyone who owes a debt and repeatedly fails to pay back that debt could have their wages garnished. It's important to remember that wage garnishment is often a last resort for most creditors; you likely will have been contacted many times and given the chance to repay your debt prior to wage garnishment.
Capped at 15% of your pay or 30 times the federal minimum wage per week. No court order required.
Up to 50-60% of disposable income can be garnished depending on your situation.
IRS can take up to 15% without a court order, depending on deductions and dependents.
Up to 25% of disposable earnings, but requires a court order first.
Student loan debt impacts millions of Americans. Its compounding interest often leaves borrowers owing way more than they took out, making it difficult to keep up with payments. If your federal student loans are in default because you failed to make your monthly payments, the U.S. Department of Education, or whatever agency you borrowed from, can pursue wage garnishment without a court order.
Student loan wage garnishment is capped at 15% of your pay or 30 times the current federal minimum wage per week. These creditors are also required to send a notice 30 days before the wage garnishment is set to start.
In a divorce, if one person is set to make more money than their spouse, leaving them with a lower income, in many states, that person will be required to make alimony payments for a certain amount of time. If a couple has a child and then gets divorced, one parent might have to make monthly child support payments.
Federal law says that if you have a child to support who is not part of the court order, then up to 50% of your disposable income can be garnished to pay child support. If you do not have any children outside the one that you are paying child support for, then up to 60% of your disposable income can be withheld to do so.
If you owe money to the IRS and you fail to pay it back, they will not waste any time before garnishing your wages. The amount the IRS can take will depend on your standard deduction amount and how many dependents you have, but as a rule of thumb, the IRS can usually take up to 15% and will not need a court order to do so.
Other debt types such as unpaid credit card bills, medical bills, or personal loans will require a court order before a creditor pursue wage garnishment. This process takes a bit longer because the creditor must first sue you in court. Only if you lose the lawsuit can the court grant a money judgment against you and allow your creditor to garnish your wages.
Federal law only allows up to 25% of your disposable earnings, or the amount by which your income exceeds 30 times the federal minimum wage, to be withheld each week.
In most situations, both sides will have rights and protections, and garnishment is no different. Though there are rights for the debtor in situations impacting an employee's earnings, it is up to you to know about these rights and exercise them in most states.
If you get notified that your wages are going to be garnished, there are a few critical things to keep in mind as you navigate the process in front of you. Most importantly, stay calm and gather all the resources that you can.
Contact the creditor to negotiate a payment plan instead of wage garnishment.
Challenge the garnishment if you believe it's in error or causes undue harm.
If valid, work to pay off the debt as quickly as possible to minimize impact.
Wage garnishment in and of itself can be extremely difficult to navigate. Having money taken from your paycheck each pay period can completely alter your financial situation and put you at risk of defaulting on other loans or paying your bills on time.
Wage garnishment probably will not show up on your credit score, but since wage garnishment is a result of overdue debt, that debt will already be impacting your credit score. In a worst-case scenario, wage garnishment could lead to bankruptcy.
For most people, wage garnishment is difficult but manageable. Once you are done paying back your debt, your creditor will notify your employer and stop garnishing your wages, making it much easier to manage your finances each pay period. Don't let wage garnishment happen over and over – once is enough.
Every day you wait, the IRS takes more of your hard-earned money. Contact us immediately for wage garnishment relief.
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