A wage garnishment can be painful for debtors because their employers must take a specific amount out of their wages each time they’re paid. This continues until the debt is paid or until whoever ordered the garnishment says to stop it. If you owe money, try to settle the matter with the lender before it gets to a wage garnishment. Otherwise, a chunk of your pay may go toward the debt.
Ordinary garnishments often follow from a legal debt judgment for such things as medical expenses, delinquent credit cards and unpaid utility bills. Title III of the Consumer Credit Protection Act safeguards some of your wages from garnishment. As of 2012, your employer may take the smaller of 25 percent of your disposable pay or the total by which your wages are more than 30 times the federal minimum hourly wage of $7.25. To figure your disposable wages, simply minus all your mandatory deductions, such as federal and state income tax, from your gross pay.
If you owe the Internal Revenue Service or the state back taxes, the agency may send a levy straight to your employer without a court order. The IRS excludes some of your wages from levy, so your employer must use Publication 1494 to see how much of your wages shouldn’t be in the levy. The calculation is based on your filing status and the number of exemptions you claim on your statement of exemption. State tax laws vary; only your state revenue agency can dictate the amount that must come of your wages. If you work in Illinois, for example, your employer can take up to 15 percent of your gross wages for a state tax levy.
Federal Student Loan
If you default on repaying your federal student loan, the U.S. Department of Education may tell your employer to garnish your wages, without a court order. Up to 15 percent of your pay can go toward a federal student loan. Also, only federal loans may be subject to an administrative wage garnishment from the DOE. Private lenders must obtain a court order to garnish wages. Since Title III of the CCPA allows up to 25 percent for wage garnishment, your employer can deduct your student loan debt and another garnishment simultaneously, as long as the total doesn’t go over 25 percent.
Child Support and Alimony
The CCPA says your employer may take up to 50 percent of your disposable pay for child support and alimony if you’re supporting a child or spouse who's not included in the support order. Otherwise, up to 60 percent can come out of your wages. If you owe child support or alimony for more than 12 weeks, you may have to pay an extra 5 percent. If your employer receives several garnishments against you, it must figure which garnishment to pay first under state law. The National Federation of Independent Business says child support and alimony withholding orders take priority over all other garnishments.
The state may have wage garnishment laws that differ from federal law. In this case, your employer must use the lower rate. For example, in Florida, if your take-home pay is $500 or less per week and you’re the head of your household, those wages cannot be garnished unless you agree to it in writing. The state may permit your employer to deduct a small administrative fee for conducting the garnishment. Certain types of income, besides regular wages, might be exempt from garnishment under state law including retirement benefits, unemployment compensation and worker's compensation. When in doubt, contact your state labor department for wage garnishment laws in your state.
- U.S. Department of Labor: Wage Garnishment
- IRS.gov: Publication 1494
- Illinois Department of Revenue: The Collection Process
- The Florida Bar: Debtors' Rights In Florida: Claiming Your Exemptions From Judgments
- Federal Student Aid: Administrative Wage Garnishment
- Automatic Data Processing: Employer Reimbursement Guide for Child Support and Garnishment Processing
- National Federation of Independent Business: Understanding the Guidelines for Wage Garnishments
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