A wage garnishment is one tool that creditors use to collect debts. With a garnishment (also called wage attachment or wage withholding), the creditor sends a garnishment order (or in some instances a wage garnishment notice) to your employer. Your employer withholds a portion of your wages each pay period and sends that money directly to your creditor. Not every creditor can garnish your wages, and there are limits on how much can be taken from your paycheck. Regular creditors cannot garnish your wages without first suing you in court and obtaining a money judgment. That means that if you owe money to a credit card company, doctor, dentist, furniture company, or the like, you don’t have to worry about garnishment unless those creditors sue you in court.
Creditors That Can Garnish Your Wages Without a Court Judgment.
There are some creditors that may garnish your wages without a judgment. Those are:
• collectors of federally-guaranteed student loans
• people and agencies to whom you owe child support or alimony, and
• taxing agencies to whom you owe back taxes (like the IRS or state taxing authority).
Although these agencies don’t have to get a judgment against you, they must provide some type of notice along with time for your to object, before garnishing your wages. The type of notice and procedures for objecting varies depending on the agency involved. The judgment creditor sends the garnishment order to your employer. Your employer will then withhold a portion of your wages each pay period and send that money directly to your creditor. The garnishment will end when you have paid the entire judgment or you reach a separate settlement on the debt with the creditor. This process works similarly for creditors on student loans, child support, and back taxes.
Limits on Wage Garnishment Amounts
Federal law limits the amount that can be garnished from your paycheck each week or month. The amounts vary depending on whether the creditor is a judgment creditor, student loan collector, taxing authority, or collector of child support. State laws also limit garnishment amounts. However, states cannot allow creditors to take more than is allowed under federal law. That is, they can offer more protection to debtors, but not less.
Objecting to the Wage Garnishment
In all types of wage garnishments, you may object to the garnishment or the amount of money that is being garnished. To do so, you must file a Claim of Exemption with the court that issued the underlying garnishment. Under federal law, your employer cannot fire you because it receives a garnishment for one debt, or two or more garnishments from the same creditor. If, however, you have more than one garnishment from different creditors, federal law does not protect you. Some states offer more employment protection when it comes to garnishments.
Again, your wages may be garnished in some situations, like if you owe child support, alimony, federal student loans, or back taxes, or a court judgment has been entered against you. Let’s say you’ve defaulted on a loan, stopped paying your credit card bills, or run up huge medical bills. Your creditors can’t just start garnishing your wages. They must first sue you. If you lose the lawsuit and the court enters a money judgment against you, the person or entity that won the lawsuit can garnish your wages by providing a copy of the court order to the local sheriff or marshal. That person will then send it to your employer. Your employer must then notify you of the garnishment, begin withholding part of your wages, send the garnished money to your creditor, and give you information on how you can protest the garnishment.
Federal law places limits on how much judgment creditors can take from your paycheck. The garnishment amount is limited to 25% of your disposable earnings for that week (what’s left after mandatory deductions) or the amount by which your disposable earnings for that week exceed 30 times the federal minimum hourly wage, whichever is less. Some states set a lower percentage limit for how much of your wages can be garnished. You may not be fired or otherwise retaliated against because your wages have been garnished to pay one debt. Generally, though, once you have more garnishments, less protection is available. Under federal law, you’re not protected from retaliation if more than one creditor has garnished your wages or the same creditor has garnished your wages for two or more debts. Some states offer more protection. If you want to protest a wage garnishment, you must file papers with the court to get a hearing date. You can present evidence at the hearing that you need more of your paycheck to pay your expenses or that you qualify for an exemption. The judge can terminate the garnishment or leave it in place.
Wage Garnishments for Child Support and Alimony
Since 1988, all new or modified child support orders include an automatic wage withholding order. If child support and alimony are combined into one family support payment, the wage withholding order applies to the whole amount owed; however, orders involving only alimony don’t result in automatic wage withholding. Once the court orders you to pay child support, the court or the child’s other parent sends a copy of the order to your employer, who will withhold the ordered amount from your paycheck and send it to the other parent. If you’re required to maintain health insurance coverage for your child, the payment for that will be deducted from your paycheck as well. More of your paycheck can be taken to pay child support. Under federal law, up to 50% of your disposable earnings may be garnished to pay child support if you’re currently supporting a spouse or a child who isn’t the subject of the order. If you aren’t supporting a spouse or child, up to 60% of your earnings may be taken. An additional 5% may be taken if you are more than 12 weeks in arrears. State law sometimes differs a bit. You may not be fired, disciplined, or otherwise retaliated against because your pay is subject to a wage withholding order to pay child support.
Wage Garnishments for Federal Student Loans
The U.S. Department of Education, or any agency trying to collect a student loan on its behalf, can garnish up to 15% of your pay if you’re in default. But you can keep an amount that’s equivalent to 30 times the current federal minimum wage per week. No lawsuit or court order is required for this type of garnishment; if you’re in default, your wages can be garnished.
At least 30 days before the garnishment is set to begin, you must be notified in writing of:
• how much you owe
• how to get a copy of records relating to the loan
• how to enter into a voluntary repayment schedule, and
• how to request a hearing on the proposed garnishment.
If a judgment creditor is attempting to garnish your wages, you might be able to challenge the garnishment by raising an objection. The procedures you need to follow to object to a wage garnishment depend on the type of debt that the creditor is trying to collect from you, as well as the laws of your state. Generally, though, the process for objecting to a garnishment begins with preparing and filing paperwork. If you believe that your earnings are exempt in full or in part under federal or state law, you should state that fact within your written objection. Or, depending on the circumstances, you might be able to say that you’ve already paid the judgment creditor or you received a bankruptcy discharge. The garnishment papers that you receive from the court should contain instructions on what you must do to object to the garnishment. If the garnishment papers you received don’t have this information, immediately contact the clerk of the court that issued the garnishment documents to find out this information. Usually, a form will be included with the garnishment notice that you can use to write your objection and request a hearing. If you didn’t get a form, ask for one from the clerk of the court that sent you the garnishment notice. If the court doesn’t have a form, write out your objection and file it on time. If you don’t state your reasons for objecting to the garnishment and timely file that written objection with the right court, you might have waived your right to fight the garnishment later.
The Garnishment Hearing
If the court sets a garnishment hearing, you have to go to the hearing to protect your wages. The judge or magistrate will either accept (or “sustain”) your objection, and the garnishment will be reduced or terminated, or overrule the objection, and the garnishment will proceed.
Stopping Wage Garnishment Without Bankruptcy
Once a creditor has obtained a judgment against you, many states require that it send you one last warning letter before the garnishment begins. This is usually called a “demand letter.” If you get a demand letter from your creditor, don’t ignore it. Many creditors prefer to get voluntary payments from debtors rather than deal with the cost and time-consuming paperwork involved with garnishments. Use this opportunity to negotiate a payment plan with the creditor before it begins the garnishment process.
Seek State-Specific Remedies
Some states offer their own additional protections against garnishment. For instance, in some states, you can request that the court appoint a trustee. In a trusteeship, you make payments to the trustee, who will then distribute those payments to your other creditors. As long as you are in a trusteeship, a creditor cannot garnish your wages. You should contact the clerk of your municipal or county court, or consult with a local attorney, to see what options are available in your state.
Get Debt Counseling
A consumer credit counseling service (CCS) may be able to help you stop a garnishment. Not to be confused with debt repair companies, a CCS is a non-profit agency that can help you negotiate and reach an agreement with your creditors to pay them over time. If your creditors agree to participate in this group payment plan, then they cannot garnish you as long as you make your payments.
Object to the Garnishment
If you do nothing after receiving the demand letter, you will then likely receive from your employer copies of the garnishment order and notice of the garnishment. You should file any objections you have to the garnishment, in writing, with the court and request a hearing. The garnishment papers might contain forms that you can fill in and request a hearing. If not, you’ll have to complete and file something separately.
Some of the more common objections you can make include:
Under federal law, your creditor can only garnish the lower of:
• 25% of your disposable earnings (gross pay less taxes and mandatory deductions), or
• your disposable earnings less 30 times the federal minimum wage
If you are being garnished for child support or alimony, then up to 50% or 60% of your disposable earnings are subject to garnishment. Garnishments for student loan debts and IRS taxes are also subject to a different computation. The laws of your state may set even tighter restrictions. If the amount of money proposed to be garnished from your wages exceed what federal and state law allow, you should object to the garnishment immediately.
The Creditor Did Not Follow Proper Procedures
If the creditor did not follow garnishment procedure, then the court may terminate the garnishment order. An example of improper garnishment would be for the creditor to fail to give you timely notice of the garnishment.
The Creditor Was Paid
If you already paid the judgment, or if the creditor received full or partial payment toward the judgment through other means (bank attachments, prior post-judgment voluntary payments, etc.) then you obviously need to object so that the creditor doesn’t receive more than what it is legally entitled.
Attend the Objection Hearing (and Negotiate if Necessary)
Once you have filed your objection, then you need to attend the hearing. If you file an objection, but do not go to the hearing, then the court may overrule your objection and the garnishment will begin. Even if you attend the hearing and the court denies your objection, you can still use this as an opportunity to meet with the creditor and negotiate a payment plan. It may not be too late to stop the garnishment if you can get the creditor to agree.
Challenge the Underlying Judgment
If you have a legal basis to dispute the judgment (for instance, you were never properly served with the complaint and subsequent legal papers), it may not be too late to stop the garnishment. You will not be able to dispute the judgment at the garnishment hearing, so raising any of your defenses or objections will fall on deaf ears. However, you may be able to vacate the judgment by filing a separate motion, posting a bond (usually) and attending a different hearing. This can be a very difficult process, so you should speak to a local attorney to discuss this further. You must also do quickly, as you may have only a limited period of time to pursue this remedy.
Continue Negotiating
Even after a garnishment has started, you can still try and negotiate a resolution with the creditor, especially if your circumstances change. For example, if you have an income tax refund that could pay off some of the judgment, then you may be able to get the creditor to agree to cancel the garnishment in exchange for a lump sum payment to settle the rest of the judgment. If a creditor is garnishing your wages to pay off a money judgment, tax debt, or student loan obligation, you probably want to know when the wage garnishment will end. The wage garnishment will end when you: pay off the debt
• settle the debt
• discharge the debt in Chapter 7 bankruptcy
• pay some or all of the debt through a Chapter 13 repayment plan, or
• successfully ask the state court to stop the garnishment.
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