Reasons Why Your Wages Could Be Garnished

Your wages may be subject to garnishment when you don’t pay financial obligations. A court order for garnishment isn’t required for child support, unpaid income taxes or federal student loan payments. Garnishment for consumer debts, such as credit cards or medical bills, requires a court order. In some states, these consumer debts aren’t subject to wage garnishment at all.

Income Taxes

The Internal Revenue Service has administrative power to garnish your wages without a court order. If you don’t pay the federal taxes you owe, you’ll receive a certified letter from the IRS outlining the proposed levy on your wages. The letter provides all the details regarding your debt, and also offers possible alternatives to garnishment, such as installment agreements. To avoid a levy on your wages, contact the IRS to submit a proposed repayment plan. The allowable amount of an IRS levy depends on your number of dependents and income.

Some states allow wage garnishment for unpaid state or local taxes. Laws vary by location; check with your state’s labor department.

Child Support

The Family Support Act of 1988 allows all child support orders to include immediate wage withholding, for both ongoing support and arrears.

For many debts, federal law limits garnishment amounts to 25 percent of your disposable earnings. However, child support garnishment has a higher limit. If you’re also supporting another child, you’re subject to garnishment of 50 percent of disposable earnings; if not, the amount is 60 percent. If you’re more than 12 weeks behind on child support payments, your disposable earnings are subject to garnishment of 65 percent.

Federal Student Loans

Default on your federal student loans, and you’ll receive a notice of garnishment from the U.S. Department of Education or the guarantor of your loan. You’ll have 30 days to respond in writing and plead your case in a hearing. Ignore the letter, and you’ll find your wages garnished without a court order -- the department has this power under administrative law. Garnishment for student loan debts is limited to 15 percent of your disposable earnings.

If you find yourself falling behind on student loan payments, contact the guarantor handling your loan. You may be eligible for deferment or income-based repayment plans. Avoid wage garnishment for federal student loan debt by communicating with the guarantor.

Court Judgments

Debts other than federal income taxes, child support and federal student loans may be collected through wage garnishment, depending on your state’s laws. Before a creditor may garnish your wages, it must sue you first. You’ll receive a summons to appear in court. If a judge finds for the creditor, you’ll be ordered by the court to pay the debt. If you fail to appear at the hearing, a default judgment may be issued against you. If you don’t pay the debt, the creditor then can obtain a garnishment order.

Each state’s laws regarding wage garnishments for court judgments differ, and some states don’t allow it at all. Avoid the issue altogether by working with your creditor to resolve your debt before it goes to court.