What Happens If Your Wages Are Garnished & You Are Laid Off?

An individual or business that has won a judgment against you may request a writ of garnishment from the courts. This allows the other party to seize a portion of your paycheck, subject to limits set down in state and federal law. A valid garnishment order continues until the debt or obligation has been paid in full. The loss of employment, however, may stop the process.

Employers are obligated to divert part of your pay when they receive a garnishment order. There's a limit to wage garnishment set by the federal Consumer Credit Protection Act: the lesser of 25 percent of disposable weekly earnings (after deductions mandated by law) or the amount by which those earnings exceed 30 times the federal minimum wage. If the garnishment is for child support, the limit rises to 50 percent of disposable earnings if the wage-earner is supporting another dependent, 60 percent if he is not.

If you lose your job, you no longer have wages to garnish, and the person, business or public agency seeking payment will have to look elsewhere. The reason for the loss of employment has no effect on what follows. However, federal law does prohibit termination because you have a single garnishment order. If you have two or more garnishment orders going, federal law doesn't ban your termination.

Normally, a court issuing a writ of garnishment requires the debtor to report any loss of employment, any new or second jobs, and any non-wage income the individual may be earning. The latter is important because it may give the creditor another path to the money it is seeking. Garnishment can also apply to certain benefits, such as Social Security, when the obligation is for child support, student loan debt or taxes. If you want to appeal a garnishment, you'll have to petition the court that issued the writ, and show that the seizure is causing undue hardship to yourself and/or your dependents.