How Wage Garnishment Works



Wage garnishment is one of the last steps in collecting debts for child support, alimony, student loans and income taxes—all of which the government can pull money from someone’s paycheck without obtaining a court order.

Wage garnishment for unpaid financial obligations such as unpaid credit cards or most loans require a court order.

If a portion of your monthly income is taken through wage garnishment, it shouldn’t come as a surprise to you.

You’ll likely receive numerous warnings that the debt is due. These can include notices from the company or agency owed the debt, such as a credit card company, followed by delinquency notices from debt collectors, a lawsuit filed against you and possibly a court judgment issued against you.

In most wage garnishment cases, federal rules allow up to 25 percent of your disposable wages to be garnished, or the amount by which your income exceeds 30 times the federal minimum wage—whichever is less.

Disposable income is arrived at by subtracting standard tax obligations and other withholdings from your gross earnings. Some types of income aren’t allowed to be garnished, such as Social Security, disability benefits, pensions and retirement funds, child support and alimony.

There are exceptions. Up to 60 percent of disposable wages can be garnished for unpaid alimony or child support. Social Security and other retirement benefits can be garnished to repay federal income taxes and child support.

Fighting wage garnishment
If your wages are going to be garnished, your employer is required by law to inform you of your right to protest it. The paperwork you receive explaining the garnishment will detail how to appeal a court’s ruling.

Some state laws are more favorable than federal laws on wage garnishment, and you can ask a court to invoke a state exemption.

Another option is to offer to pay a percentage of your debt to a debt collector as a lump sum, which will make it easier for them to get the money than to file lawsuits seeking wage garnishment. If you can get ahold of a debt collector before wage garnishment is sought, you may be able to set up a payment plan of your debt or agree to one payment.

Wage garnishment can be one of the last payment methods you’ll want to be part of if you owe someone money. Money can be taken out of your paycheck before you get your hands on it, leaving you with less money than expected — but with your debt ultimately paid after months or even years of garnishment.

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