Wage Garnishment: What It Is And How To Stop It

Are Your Wages Being Garnished? It’s Time to Know Your Rights!

When you owe a debt to an organization or individual, there can be many ways that the court and creditors can go about collecting payment. And while your best option is to work out a payment plan that fits with your financial situation, this isn’t always possible.

Often times, the court will come to a decision to collect payment on their terms. A common way to do this is through wage garnishment.

If the court comes to this decision, it is essential that you understand your rights and what your options are.

In this guide, we’re covering what wage garnishment is, what you can do about it, and how to find relief without the stress.

What Is Wage Garnishment?

Wage garnishment is a court judgment that orders that your employer direct a portion of your wages to cover your debt. This money is typically sent directly to the creditor or debtee. Your paycheck will be garnished until the debt is paid off or resolved.

Child support and alimony, student loans, and consumer debts are all common types of debts that are eligible for wage garnishment.

If you are struggling to make payments on these debts (or can’t make payments at all), having your wages garnished can feel like an even greater financial burden.

Fortunately, you have rights. These include caps on how much of your wages can be garnished and how often. You also have alternative options for relief so that you can get back on your feet.

Types Of Garnishment And How It Happens

When your debt starts to pile up, creditors and people you owe money to will get even more insistent that you pay them back. A garnishment judgment typically comes when you have missed several payments or have not attempted to pay down the debt at all.

The creditor can often sue you for nonpayment or even force garnishment without a court order (typically in the case of owed child support, unpaid student loans, or back taxes).

Garnishment is very common. In fact, one report found that over 7% of employees had their wages garnished in 2013. The most common reasons were student loans, child support, tax liens, and consumer debts.

Wage Vs Non-Wage

There are two types of garnishment: wage and non-wage.

In the case of a wage garnishment, creditors can legally demand that your employer divert a portion of your paycheck to paying off your debt.

Non-wage garnishment, on the other hand, is when creditors access your earnings in your bank account and tap into those funds. This is also referred to as a bank levy.

With wage garnishment, the court will send a notice to you and your employer indicating when garnishment will start. The garnishment will continue until the debt is paid off.

Wages Being Garnished? Know Your Rights

If you have received a garnishment notice, it is important that you know your rights.

The first thing to note is that different rules apply to different types of debt. For each, there are limits on how much of your wages can be garnished.

Know The Financial Consumer Protection Act

Title III of the Financial Consumer Protection Act is the federal law that regulates wage garnishment. This sets limits on the amount of your earnings that can be garnished to pay off a debt. It also protects you from being fired if your wages are being garnished for only one debt.

If you have questions NOT related to the amount being garnished or employment termination, then you should contact the court that issued the judgment.

We recommend reviewing Title III so you become familiar with your rights and protections under the law.

Know That Most Creditors Need A Court Order

Creditors can only garnish your wages if you owe child support, back taxes, or student loans. Otherwise, they need a court order.

If, for example, you owe money on a large medical bill or stopped paying your utility bill, creditors can’t just start garnishing your wages. First, they must sue you in court, win, and get a court judgment that orders that your wages be garnished to pay off your debt.

Know The Limits On Wage Garnishment For Your Type Of Debt

The amount of your “disposable earnings” that can be garnished is limited to 25%. “Disposable earnings” refers to any income that’s left over after mandatory deductions.

The limit may be lower depending on the type of debt and what state you live in. Continue reading to learn about garnishment limits for your debt type and learn about the law in your state here.

Know That You Can’t Be Fired If Your Wages Are Garnished For Only One Debt

The law protects you from being fired or retaliated against if your wages are being garnished to pay only one debt. If you have over one garnishment, you get less protection. Again, this depends on the state that you are in and the type of debt that you have.

Know That Some Forms Of Income Are Exempt From Wage Garnishment

Veterans benefits and Social Security are exempt from garnishment. However, they may be subject to a bank levy (non-wage garnishment). You can learn more about wage garnishment exemptions here.

Know That You Can Protest Wage Garnishment

You can always protest wage garnishment by filing papers with the court. You can request a hearing where you will present evidence showing that you need more of your earnings, that you have another payment plan in place, or that you qualify for an exemption.

The judge can decide to leave the garnishment order in place or terminate it.

How Much Of My Wages Can Be Garnished?

There are federal limits on how much of your disposable earnings can be garnished to cover a debt. Your disposable earnings are any money left over after necessary deductions (like taxes and Social Security).

State laws vary widely when it comes to wage garnishment. For example, you may have extra protection from retaliation or termination. You may also have a lower percentage limit on how much of your wages can be garnished.

What To Do If You Get A Wage Garnishment Judgment

If you receive a wage garnishment notice, you have three options for how to respond: 1) work out a different payment plan, 2) challenge the court judgment, or 3) accept the judgment.

Before you decide on how to proceed, be sure to check that all of the information on your notice is accurate and that it is, in fact, your debt. Then, consider how much the wage garnishment amount will affect your financial situation.

Work Out A Different Payment Plan

If you feel that having your wages garnished will put you in an even rougher financial spot, then you may want to consider working out a different payment plan.

To do this, contact your creditors directly to discuss your options. You can explain your financial circumstances, discuss how much you owe, and see what you can do to pay down your debt. You may be able to work out an alternative plan.

Challenge The Court Judgment

If you see inaccuracies on the notice or otherwise think the decision was made in error, it’s recommended that you object the judgment in court. The important thing is to move quickly, as you can have as few as 5 days to contest the order. Be prepared to present evidence that supports your case.

Accept It

If the judgment was not made in error and if wage garnishment doesn’t significantly affect your financial situation, you may choose to accept the order. You can then pay it off in regular installments or as a lump sum.

Some debtors choose to take out a personal loan or borrow money from friends or family to pay off their garnishment. While this is an option, it’s not advisable to put yourself into more debt.

You may feel embarrassed by your situation, especially when it comes to handling it with your employer. However, the best approach is to discuss the matter openly with your HR department to ensure that you stay on track.

Seek Other Debt Relief Options

No matter your debt situation, it is worth looking into all of your debt relief options. The Credit Review can help you find relief, settle tax debt, and more.

Here are some other ways to seek relief from your wage garnishment situation:

Negotiate

Even if wage garnishment has already started, you can attempt to negotiate a different payment plan with your creditor.

If your financial situation changes (say, if you get a high-income tax refund or gain access to your inheritance), you can offer to pay off a lump sum. The creditor may then reduce your regular payments or even cancel the garnishment. Don’t be afraid to reach out to your creditor to discuss your options.

Seek Debt Counseling

There are non-profit agencies you can look to for debt relief counseling.

These are known as a consumer credit counseling service (CSS) providers and they are skilled at helping debtors manage their debt effectively. They can even help you negotiate with your creditor and settle on a different payment plan. If your creditor agrees, then they will not garnish your wages as long as you make regular payments.

Look Into State-Specific Options

Your state may offer their own debt relief programs and/or protections against wage garnishment. To explore your options, contact the clerk of your county or municipal court and explain your situation. You may also want to consult a local attorney on the matter.

Request And Attend An Objection Hearing

If you have an issue with the wage garnishment decision, then you can file an objection with the court. You will then schedule a hearing and be asked to plead your case and likely present evidence to support it.

If you don’t attend the hearing, the court may choose to overrule your objection and the garnishment will begin. If you do attend, they may overrule or decide in your favor. A hearing is also an opportunity to negotiate with the creditor in order to settle on a different payment plan.

Work With A Trusted Debt Relief Company

Another great debt relief option is to work with a trusted debt relief company. This is different from a non-profit CSS.

Debt relief companies work with you to help you settle and consolidate your debt. They provide expert assistance with paying off your debt, negotiating payment terms, and staying on top of your wage garnishment.

By working with a debt relief company, you can be debt free within 24-48 months. And, if you come into some cash, they can help you pay off your debt early.

Good news is, you are not without options. If your debt is from federal or state taxes, work with a trusted tax relief company to get you back on track to financial freedom.

Can I stop a wage garnishment on my taxes?

Yes, but it will require some negotiation. Some of your options include installment payments and an Offer in Compromise.

Can the IRS take my entire paycheck?

Yes, the IRS can garnish your entire paycheck if you have overdue taxes and has sent you multiple notices asking you to pay.

Which federal law regulates wage garnishment?

Title III of the Consumer Financial Protection Act is the federal law that regulates wage garnishment and sets limits on the amount of your earnings that can be garnished. It also protects you from being fired if your wages are being garnished for only one debt.

What if wage garnishment is becoming a financial burden?

If wage garnishment is causing you more financial stress, we recommend looking into additional debt relief options. Some options include objecting the garnishment, seeking a debt relief counselor, or working with a debt relief company. You don’t have to face this burden alone.

Can my wages be garnished for child support or alimony?

Yes. Creditors can garnish your wages for child support or alimony with or without a court order. Your disposable earnings can be garnished up to 60%, or 50% if you are supporting another child or spouse.

About The Author

Minji Kim, LLM

Tax Attorney LLM at Anthem Tax Services

Minji Kim is currently a tax attorney at top rated tax resolution company Anthem Tax Services. With 10 years of experience practicing in tax law, Minji Kim has a Juris Doctor (JD) degree with a concentration in Taxation. After finishing her 1st year law school Taxation class, she become more interested in taxation, and she ended up signing up for a Joint Degree Program during Law School.

One year after getting her Juris Doctor Degree, Minji Kim received her Master of Laws (LL.M) degree in Tax Law. Minji was involved in numerous volunteer activities while in Law School. She particularly enjoyed being a VITA (Volunteer Income Tax Assistance) member, because she found it very interesting to see how an individual's tax numbers can change depending on different circumstances.

Minji enjoys assisting people in tax law strategy and improving their tax situation, and strives to help people understand better how taxes are involved in everyday life.

Articles by Minji Kim, LLM

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