A wage garnishment, sometimes called a wage attachment, is an order requiring your employer to withhold a specific amount of money from your pay and send it directly to one of your creditors. In most cases, a creditor can’t garnish your wages without first getting a money judgment from a court. For instance, if you’re behind on credit card payments or owe a doctor’s bill, those creditors can’t garnish your wages unless they sue you and get a judgment. Some creditors, though, like those you owe taxes, federal student loans, child support, or alimony, don’t have to file a suit to get a wage garnishment. These creditors have a statutory right to take money directly out of your paycheck.
But creditors can’t seize all of the money in your paycheck. Different rules and legal limits determine how much of your pay can be garnished. For example, federal law places limits on how much judgment creditors can take. 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 limit for how much of your wages are subject to garnishment. Utah wage garnishment laws protect the same amount as the federal wage garnishment laws. The creditor will continue to garnish your wages until the debt is paid off, or you take some measure to stop the garnishment, such as claiming an exemption with the court. Your state’s exemption laws determine the amount of income you’ll be able to retain. Depending on your situation, you might be able to partially or fully keep your money. You can also potentially stop most garnishments by filing for bankruptcy.
Limits on Wage Garnishment in Utah
In Utah, the most a creditor can garnish from your wages is:
• 25% of your disposable earnings for that pay period
• the amount by which your disposable earnings for the week exceed 30 times the federal minimum hourly wage, or
• 15% of the individual’s disposable earnings for that pay period if the judgment relates to an education loan.
• “Disposable earnings” are those wages left after your employer has made deductions required by law.
Limits for Child Support, Student Loans, and Unpaid Taxes
If you owe child support, federal student loans, or taxes, the government or creditor can garnish your wages without getting a court judgment for that purpose. The amount that can be garnished is different than it is for judgment creditors.
Garnishment Limits for Unpaid Child Support
Since 1988, all court orders for child support include an automatic income withholding order. The other parent can also get a wage garnishment order from the court if you get behind in child support payments. Federal law limits this type of wage garnishment. 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’re more than 12 weeks in arrears.
Garnishment Limit for Federal Student Loans in Default
Under federal law, the U.S. Department of Education or any entity collecting for this agency can garnish up to 15% of your pay if you’re in default on a federal student loan (the same as Utah state law). This kind of garnishment is called an “administrative garnishment.” But you can keep an amount that’s equivalent to 30 times the current federal minimum wage per week.
Garnishment Limits for Unpaid Taxes
The federal government can garnish your wages (called a “levy”) if you owe back taxes, even without a court judgment. The weekly exempt amount is based on the total of the taxpayer’s standard deduction, and the aggregate amount of the deductions for personal exemptions allowed the taxpayer in the taxable year in which such levy occurs. Then, this total is divided by 52. If you don’t verify the standard deduction and how many dependents you would be entitled to claim on your tax return, the IRS bases the amount exempt from levy on the standard deduction for a married person filing separately, with only one personal exemption. States and local governments may also be able to garnish your wages to collect unpaid state and local taxes.
How to Protect Your Wages from Garnishment
If you receive a notice of a wage garnishment order, you might be able to protect or “exempt” some or all of your wages by filing an exemption claim with the court or 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, as well as the laws of your state. You can also stop most garnishments by filing for bankruptcy. Your state’s exemption laws determine the amount of income you’ll be able to keep.
Restrictions on Job Termination Due to Wage Garnishments
Complying with wage garnishment orders can be a hassle for your employer; some might prefer to terminate your employment rather than comply. Federal and sometimes state laws provide some protection for you in this situation. According to federal law, your employer can’t discharge you if you have one wage garnishment. Utah law provides the same protection. Under state law, no employer may discharge any employee because the employee’s earnings are subject to garnishment in connection with any one judgment. But federal and state law won’t protect you if you have more than one wage garnishment order.
Types of Wage Garnishments
Government agencies and court orders can require employers to garnish an employee’s wages to collect unpaid debts or financial responsibility. Government agencies and court orders can require employers to garnish an employee’s wages to collect unpaid debts or financial responsibility. Federal and state tax agencies will impose a levy on an employee’s wages for outstanding tax balances.
There are five types of wage garnishments that employers can receive.
Federal Wage Garnishments
Wage garnishments are ranked in order of importance. Federal debts must be paid first, except if there is a Child Support garnishment in place. State wage garnishments are issued after all federal debt is repaid.
Child support is the first priority for wage garnishments. As a federal tax obligation, employment income must first satisfy child support requirements. The law orders automatic wage withholding for family support orders, spousal support, and alimony. Employers must notify the employee once a wage garnishment is issued. They must also state the amount that will be withheld from each paycheck.
Federal Student Loans
If an individual defaults on a federal student loan, the government has the right to garnish up to 15 percent of the student’s wages. Since the U.S. Department of Education issues federal student loans, they are treated as other federal debts. The borrower will be notified 30 days prior to garnishments. Federal student loans are next in importance after child support.
State Wage Garnishments
After all federal debt is settled, state tax agencies are eligible to collect any unpaid debt.
State Income Taxes
If you fail to file a tax return or incorrectly report income, you may be subject to wage garnishments. Citizens who do not pay owed state taxes can face garnishments up to 15 percent of wages until the debt is repaid varies by employee’s work state.
Credit Cards and all Other Debt
Once federal and state tax levies are taken care of, private organizations have the right to garnish a borrower’s wages. This typically comes in the form of credit card and other debt.
Other liabilities may include medical bills, personal loans, or other unpaid consumer obligations. When it comes to consumer debt, the order in which it is retrieved is based on the date the debt was acquired. The earliest debt must be paid first. Garnishments continue in order of the time received. The amount that can be garnished from the employee’s wages varies by the employee work state.
Wage Garnishment Protections for Employees
There are a number of protections in place for employees whose wages are garnished. The federal government and many states have policies in place that prevent debtors from becoming impoverished while repaying their debts. Two of the most important protections are:
• Only a certain amount of work income may be garnished. Under the Consumer Credit Protection Act (CCPA), a garnishment sought in federal court may not exceed 25 percent of the debtor’s disposable earnings each week. However, if the garnishment is for back payment of child support it could be as high as 60 percent of disposable income. Alternatively, the court order could garnish the amount by which the debtor’s disposable earnings for the week exceed thirty times the federal minimum wage whichever is lower. For the purposes of this law, “disposable income” means all of your income, even if it’s from multiple jobs, with the required tax deductions subtracted. Other payments that are necessary to your daily life, such as rent, food, and health insurance, aren’t included in this calculation. If you have more than one debt to repay, but not enough income to cover them all at the same time, the later creditors must wait until your earlier debts have been repaid.
• Employees cannot be fired because their wages are garnished. Federal law protects you from being fired simply because your wages are being garnished for a single debt. However, if your wages are being garnished for two or more debts, your employer can fire you if it decides to do so.
How to Avoid a Wage Garnishment Order
The best way to avoid a wage garnishment order is to keep up with your debt payments. Ideally, you should pay your debts on time and in full, but this is not always possible. If you know you may have trouble paying all your bills on time, you should contact your creditors. Most student loan administrators have a variety of ways for you to avoid default. Child support, on the other hand, may be modified by court order if you can show that you can no longer afford the payments.
In addition, the IRS and some state tax departments can help you schedule structured payments to repay your back taxes. Finally, some banks and other private debts may be able to work out more affordable payment arrangements. If you‘re unable to work out an alternative arrangement and you see the notice for the wage garnishment hearing in the mail, don’t ignore it! Attend the hearing with an attorney if possible. Bring along any documentation you may have about the debt, including proof of attempted payments and attempts to negotiate a different payment schedule, as well as proof of your income and expenses.
If you were unable to attend the garnishment hearing and the garnishment takes effect, you should ask your employer for a copy of the court order. You may be able to request that the court review the garnishment order.
Stopping Wage Garnishment without Bankruptcy
Respond to the Creditor’s Demand Letter
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 Salt lake, Utah, 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. In Utah, you can make a claim of exemption. You can reduce or eliminate the garnishment if you can show economic hardship and that your income is needed to support your family. 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 allows, 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.
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 none of the above options are sufficient, you may want to consider using bankruptcy.
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