What Is Wage Garnishment? How It Works and How To Stop It
If you’ve fallen behind on debt payments, you could face wage garnishment. Wage garnishment is a legal process that allows your creditor to take money that you owe directly from your paycheck.
It is stressful losing part of your wages, but learning more about the garnishment process (and what you can do about it) can help.
- Wage garnishment is a form of debt collection in which creditors are legally allowed to collect on a debt by withholding earnings from your paycheck.
- As of this writing, if your weekly disposable earnings are $217.50 or less, your wages can’t be garnished for credit card and personal loan debt. Disposable earnings are the amount left after legally required deductions.
- It’s possible to stop wage garnishment by claiming exemptions, filing for bankruptcy or negotiating with creditors.
- Wage garnishment is complicated and subject to state and federal law. You may want to speak with a lawyer.
What is wage garnishment?
Wage garnishment is a form of debt collection in which an individual’s earnings are withheld each pay period to repay a debt. This is carried out through a legal proceeding after a creditor sues an individual for unpaid debt.
Typically, a court order is issued, allowing the creditor to take a portion of your earnings to recover money they are owed. The amount that can be deducted depends on the type of debt you owe and your earnings, but is typically limited to up to 25% of your take-home pay.
Common types of wage garnishment include:
- Creditors (such as personal loans, auto loans and credit cards)
- Child support
- Alimony
- Student loans
- State and/or federal taxes
- Medical bills
In addition to an individual’s wages and salaries, earnings can include commission, bonuses, pensions and/or retirement accounts. However, earnings do not include certain federal benefits like Social Security and veterans’ benefits.
How does wage garnishment work?
- Your creditor sues you. For most private debts, a debt collector must win a lawsuit before garnishing your wages. Government agencies are the main exception — the IRS, for instance, can garnish your wages without suing, though it must send you prior notice.
- The court issues a judgment. If you ignore the lawsuit or don’t respond in a timely manner, the court will likely issue a money judgment against you.
- The court approves a wage garnishment order. If you still fail to repay your debt, the creditor will ask the court to issue a wage garnishment order.
- Your employer receives notice. Once the court approves the wage garnishment order, it will notify your employer, who calculates how much money to withhold based on your disposable income.
- Wage garnishment begins. Your employer typically starts taking money from your paycheck and sends it directly to the creditor or the court until the debt is repaid in full.
If a court grants a bank levy against you, your bank will freeze your account. While frozen, the bank will review how much money can legally be turned over to the creditor.
You typically won’t receive notice from a creditor before it freezes your account. But your bank must notify you once the freeze takes effect.
Options for stopping wage garnishment
Wage garnishment can be stopped under certain conditions. Typically, the garnishment ends when the debt is satisfied or the garnishment period ends.
However, the garnishment order can also be revoked if you take action.
- Challenge the garnishment: If you think your earnings are exempt, challenge your wage garnishment. Instructions on how to challenge (or object to) the garnishment should be included in your demand letter. You have a set period of time to challenge your garnishment, so act fast.
- Claim exemption: Certain exemptions may allow you to avoid having your wages garnished. For instance, Florida law prevents wage garnishment if you are the head of a household, make less than $750 per week and have a dependent.
- File for bankruptcy: Filing for bankruptcy can stop wage garnishment, either temporarily or sometimes permanently. During bankruptcy, creditors are not allowed to pursue debt collection activity since you agree to a repayment plan, which resolves the debt in three to five years.
Wage garnishment can be complex, so you may want to seek out legal help, especially if you plan to file for bankruptcy.
Additionally, a debt relief or credit counseling company can assist. In some instances, you may be able to negotiate with creditors and enter a payment plan or settle the debt for a lower amount.
How much of your wages can be garnished?
How much of your wages can be garnished is determined by the type of debt you owe and your disposable earnings. This is the amount of earnings after certain legal deductions are made, including local, state and federal taxes, Social Security, and Medicare.
Garnishment of consumer debts is limited by the Consumer Credit Protection Act (CCPA) wage garnishment protections, which are set at the lesser of 25% of disposable earnings or the difference between disposable income and 30 times the federal minimum wage of $7.25/hour.
Federal wage garnishment limits
The CCPA wage garnishment protections also set a limit for federal wage garnishment, which includes debts like child support or alimony. The law allows for up to 50% of disposable earnings to be garnished for individuals supporting another child or a spouse, or 60% if they are not.
Additionally, federal and collections agencies are allowed to collect up to 15% of disposable earnings for non-tax debts, including student loans.
| Type of debt | Federal garnishment limit |
|---|---|
| Child support and alimony |
|
| Consumer debt (e.g., credit cards and personal loans ) | Whichever is less between:
|
| Federal student loans |
|
For more information, please see the Department of Labor’s wage garnishment fact sheet.
State wage garnishment protections
Some states offer additional protections from wage garnishment. These protections vary state by state, but similar to federal protections, they limit wage garnishment, with some outlawing it for particular types of consumer debt to ensure you keep a larger portion of your disposable earnings.
Frequently asked questions
Wage garnishment protections prevent employers from firing an employee whose wages are garnished. However, you lose protections if you are subject to garnishment for multiple debts with multiple creditors and could be in danger of losing your job.
Yes, wage garnishment can hurt your credit score if creditors continue to report debts as delinquent due to late payments. And even though the debt is being repaid through wage garnishment, creditors may add payment details to your credit report, which means other creditors will see the garnishment when reviewing your report.
Since a court order is issued for wage garnishment and legally requires employers to withhold a certain amount from your paycheck, when you change jobs, the garnishment will continue.
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