Wage garnishment may be legally implemented by a creditor for the purpose of repaying outstanding debt. If an individual has a large amount of unpaid debts, garnishment of wages may be a justifiable concern. Understanding the facts regarding garnishment can help people with questions or fears about having a creditor garnishing their wages.
How a Creditor Garnishes Wages
Creditors start by taking the debtor to court. If a judgement against the debtor is granted, the creditor has the authority to demand payment or search for the debtor’s assets. If the debtor has no assets or fails to provide payment on demand to the creditor, then the creditor returns to the court to obtain a garnishment order.
Not all debts require the creditor to obtain a judgment. For example, debts owed to the Internal Revenue Service (IRS) don’t require a hearing or a judgment. IRS can implement garnishment to obtain money for taxes the debtor owes.
Wage Garnishment Amounts
The amount of wages the debtor can garnish depends upon the debtor’s state of residence. Federal laws establish garnishment as the lesser of two values. Earnings over the threshold of 30 times’ federal minimum wage may be garnished. Alternatively, 25 percent of the debtor’s disposable income may be accessed.
Federal law says that disposable income is money left over after all legally required deductions, including federal, state, and local taxes and payments to Social Security are made. The law doesn’t consider what the debtor must pay to service a mortgage or car payment.
However, repayment of other obligations, such as alimony or child support, can make prospects of garnishment even more painful. Up to 60 percent of the individual’s “disposable income” may be garnished to pay these essential financial obligations.
People with concerns about garnishment have two remedies to stop a “writ of garnishment” entry:
Bankruptcy is the first. A declaration of bankruptcy immediately stops wage attachments from the moment the petition is filed. Bankruptcy won’t protect the debtor from IRS claims or child support-triggered wage garnishment, however.
Credit negotiation and settlement is the second. The debtor must negotiate satisfactory settlement offers with his or her creditors. Once the written settlement agreements are in hand, garnishment of wages should cease.
In addition, it’s possible to reduce garnishment by asking a judge to evaluate the financial circumstances. For example, a garnishment can make it difficult to pay for life’s essentials. If the debtor is the principal wage earner in his or her family, the judge is likely to reduce the garnished amount.