Wage Garnishment: What it means to you

Wage garnishment is when a judgment creditor gets a court order to take a percentage of the money earned directly from a consumer's earnings or tax refunds. It should be said that consumers have certain statutory rights as regards wage garnishment.  These rights outline the percentage and amount that can be taken and, in some states, the number of garnishments. Also, some states limit or do not permit garnishments. 

Most wage garnishments are initiated by court order after a creditor sues and is awarded a judgment.  This judgment in turn gives the judgment creditor or his agents the right to take percentage of the judgment debtor’s personal earnings to pay the judgment. The payments come directly from the place of employment and are deducted the amount that is due after taxes.

If you owe a tax debt to the Internal Revenue Service or other state or federal agencies, your wages may be garnished without a court order.

After the judgment has been awarded the creditor needs to get a writ of garnishment. Once the writ has been given they notify to the employer and debtor by either a process server or sheriff serving the court order. This then notifies the debtor that a garnishment has been placed on their wages, the amount that will be taken under the order. It also informs the employer of their obligations under the garnishment.

Federal law states how much can be garnished from your wages. This amount is based on the amount of money you have after, such as federal and state taxes, Social Security, and unemployment insurance. Some usual deduction that are not exempt from garnishment are union dues, health and life insurance contributions and savings bond purchases, as these are considered part of  disposable income.

The weekly amount can not exceed the lesser amount of either, 25 percent of disposable income, or the amount by which disposable income is greater than 30 times the federal minimum wage.  This is $7.25 per hour effective July 24, 2009.

Child support and alimony are a separate consideration.  Federal garnishment law allows up to 50 percent of disposable earnings to be garnished if the debtor is supporting another spouse or child, or up to 60 percent if not. The debtor’s wages may not be garnished if another creditor is garnishing their wages already.  An exception to this would be if the first garnishment takes less than 25 percent of the debtor’s disposable income, or the judgment creditor has a judgment for alimony or child support.

Some states restrict wage garnishment and others observe the federal exemptions outlined above, if the state wage garnishment law differs from the federal one, the law resulting in the smaller garnishment must be observed. Additionally, many states allow for the continuous garnishment of wages until the judgment debtor pays off a judgment, while some states limit the time for garnishment.