A wage garnishment or attachment occurs when a court orders a debtor’s employer to withhold a certain percentage of their paycheck. The employer must send this amount directly to the creditor to pay off the debt. Wage garnishments often arise when a creditor receives a money judgment, when a debtor owes support to their child or ex-spouse, when a taxpayer has failed to comply with tax obligations, or when a consumer has defaulted on their student loans. Your rights and obligations vary in each situation.
A typical creditor, such as a credit card company, cannot garnish a debtor’s wages without a court order. When a creditor gets a money judgment against a debtor in court, it can give the resulting order to the sheriff. The sheriff will notify the employer of the wage garnishment, and the employer will notify the debtor. The garnishment likely will start soon after notifying the debtor, although the debtor will have an opportunity to object to the garnishment in a formal hearing. The court or the debtor’s employer will tell them how they can object.
Wage Garnishment and Bankruptcy
Filing for bankruptcy may sometimes stop wage garnishment, but the debt may need to be paid back eventually.
Under federal law, a creditor cannot garnish more than 25 percent of your net earnings after mandatory deductions or, if it is lower, the amount by which your weekly earnings exceed 30 times the minimum wage. A debtor may have stronger protections under state law.
The law regarding employee rights in this area is complicated. Your employer cannot retaliate against you based on a wage garnishment for a single debt. However, your employer may legally fire you if your wages are being garnished for more than one debt, even if the debts involve the same creditor. Again, you may have more rights under state law than under federal law.
Child and Spousal Support
You may lose a greater amount of your paycheck to child support than you would to an ordinary creditor. The garnishment order may take half of your net earnings and as much as 60 percent if you are not supporting a different spouse or child. If you are more than 12 weeks behind in payments, you may lose as much as 65 percent of your net earnings. If the child support payment is combined with a spousal support payment, the wage garnishment will apply to the total amount. A wage garnishment does not automatically apply to spousal support if it is not combined with child support. However, you have rights against termination or other retaliation at work based on a garnishment for child support.
The IRS does not need a court order to garnish your wages for unpaid taxes. It will follow a formula based on the number of dependents whom you are supporting and the amount of your standard deduction. Your employer will give you the wage levy notice that it receives from the IRS, and you will need to complete the attached exemption claim form. Some state tax agencies also may garnish wages, although they may be subject to greater limits on the percentage that they can take.
Your wages also can be garnished to cover health insurance for your child.
You may lose up to 15 percent of your earnings to a wage garnishment if you default on a student loan. The U.S. Department of Education or any entity assisting it can garnish your wages without getting a court order. However, you have a right to be informed about the amount that you owe and about how to obtain a hearing on the garnishment. The Department of Education or other agency also must tell you how to arrange a voluntary repayment plan and how to get records related to the loan.