Everything You Need to Know About Wage Garnishment and What to Do About It
Wage garnishment is a legal action wherein a judge orders that a portion of your earnings be withheld each pay period so as to pay one of your debts. A garnishment allows your creditors to take part of your pay to pay back the debts you owe them. This also includes bonuses and commissions. Both governmental entities and private creditors can avail themselves of garnishment laws.
The Consumer Credit Protection Act
Title III of the Consumer Credit Protection Act of 1968 (CCPA) regulates wage garnishment on a federal level and applies to you and everyone else who receives earnings. It also covers your employer. According to the CCPA, the maximum amount of your wages that can be garnished equals the lesser of 25% of your disposable income or the amount by which your disposable earnings exceed 30 times the current minimum hourly wage. “Disposable income” means the amount of your paycheck left over after taking out your taxes and other legally required deductions.
There are some exceptions to these rules in relation to bankruptcy, child support and state or federal taxes. If you face a situation where multiple garnishments have been ordered and they cannot all be satisfied under the maximum garnishment amount allowed by law, then the following priority order applies:
- Bankruptcy orders
- Child support
- Federal tax levy
- Federal student loan
- State tax levy
- State student loan
- Local tax levy
- Creditor garnishments
The CCPA also specifies that your employer cannot fire you if your earnings are subject to garnishment for a single debt. However, if you are subject to garnished wages for multiple debts, the same does not necessarily apply. When your state’s laws differ from the CCPA, the law resulting in the lesser garnishment, or prohibiting your dismissal, takes precedence. Certain states have laws that provide additional protection. Your best interests dictate that you work with a local wage garnishment attorney familiar with your state’s laws.
Wage Garnishment Procedure
A writ of garnishment, aka court order, is almost always required for payroll garnishment. Exceptions apply with regard to the Internal Revenue Service. They can garnish your wages without a court order to recover your unpaid taxes, and federal student loan providers, which can garnish your wages without a court order to recover unpaid loan amounts.
The garnishment process begins with your creditor obtaining a writ of garnishment from a court. (S)he or the court then notifies your employer of the garnishment and the amount that must be deducted from your paycheck to satisfy the garnishment. When presented with a valid garnishment order, your employer has no choice but to comply with it. They must notify you of the amount that will be coming out of your paycheck each pay period until the debt has been paid.
If you live in Texas, Pennsylvania, North Carolina or South Carolina, your wages can only be garnished for debts resulting from delinquent taxes, child support, student loans and court-ordered fines. If you live in Florida, state law provides for a head-of-household exemption that prohibits garnishment of your wages if you pay at least 50% of a child’s or other dependent’s support. Connect with a local lawyer to find out what, if anything, is exempt from garnishment in your state.
Wage Garnishments for Child and Spousal Support
Once a court orders you to pay child or spousal support, a copy of the order can be sent to your employer who must then withhold the specific amount from your paycheck and send it to the agency responsible for collecting the child or spousal support. If the court requires you to maintain health insurance for your child, the amount of that premium will also be deducted from your paycheck. If child support and alimony are combined into a single payment, the entire amount is garnished. However, orders for spousal support only almost never result in automatic wage garnishment.
Up to 50% of your disposable income can be garnished for child support if you are currently supporting another spouse or child not the subject of the garnishment order. If you are not supporting another spouse or child, up to 60% of your earnings may be garnished. If you are more than 12 weeks late on payments on the date the garnishment takes effect, an additional 5% may be garnished.
Wage Garnishments for Student Loans
Agencies tasked with collecting student loans can garnish up to 15% of your pay to recover the loan. This includes the US Department of Education. There is no requirement of a lawsuit or court order for this type of garnishment. At least 30 days before the garnishment is set to begin, you must receive written notification of the following:
- The amount you owe
- How to get a copy of records relating to the loan
- How you can enter into a voluntary repayment schedule
- Instructions on how you can request a hearing regarding the proposed garnishment
Wage Garnishments for Back Taxes
If you owe back taxes to the IRS, it can take a big chunk of your pay without an order. The amount you get to keep depends on the number of dependents you have and your standard deduction amount. In all likelihood, your employer will pay you a fairly low amount each pay period and send the rest of your paycheck amount to the IRS.
The IRS must send its own wage levy notice to your employer who must give you a copy of it. The notice includes an exemption claim form which you have to fill out and return. State and local tax agencies also have the right to take some of your wages; however, certain state laws limit how much these taxing authorities can garnish.
How an Attorney Can Help You Fight Wage Garnishments
If you want to fight a wage garnishment, you must file papers with the court to get a hearing date. Hire an experienced wage garnishment attorney. They can help you present evidence that you need more of your paycheck to pay your basic living expenses. The judge ultimately decides whether to terminate the garnishment, reduce it or leave it in place.
Work with an Experienced Local Lawyer
Submit a request online or call us today at (866) 345-6784 to get in touch with an experienced wage garnishment attorney in your area.