Wage Garnishment: Laws, Salary & Wages,
Student Loans & Military
This article is
lengthy but it discusses all angles of a wage garnishment,
protecting yourself and includes information on student loans
and military levies as well as relation to state law. The
Federal Garnishment law can be used in relation to state laws
as well. Wherever more protection is provided to the consumer
and the amount that can be taken.
What is a wage
garnishment?
A wage garnishment is any legal or equitable procedure
through which some portion of a person's earnings is required
to be withheld by an employer for the payment of a debt. Most
garnishments are made by court order. Other types of legal
or equitable procedures include IRS or state tax collection
agency levies for unpaid taxes and federal agency administrative
garnishments for non-tax debts owed the federal government.
Wage garnishments
do not include voluntary wage assignments - that is, situations
in which employees voluntarily agree that their employers
may turn over some specified amount of their earnings to
a creditor or creditors.
Short video discussing what a wage
garnishment is and how you can stop it with a bankruptcy filing.
Which Federal
law regulates wage garnishment?
The Federal Wage Garnishment Law, Consumer Credit Protection
Act's Title 3 (CCPA) limits the amount of an employee's
earnings that may be garnished and protects an employee from
being fired if pay is garnished for only one debt. Title III
is administered by the Wage and Hour Division of the Department
of Labor's Employment Standards Administration. The Wage and
Hour Division has no other authority with regard to garnishments.
Questions over issues other than the amount being garnished
or termination should be referred to the court or agency initiating
the withholding action. For example, questions regarding the
priority given to certain garnishments over others are not
matters covered by Title III and may be referred to the court
or agency initiating the garnishment action.
To whom does
the law apply?
The law protects everyone receiving personal earnings, i.e.,
wages, salaries, commissions, bonuses, or other income - including
earnings from a pension or retirement program. Tips are generally
not considered earnings for the purposes of the wage garnishment
law. The law applies in all 50 states, the District of Columbia,
and all U.S. territories and possessions.
What is the
protection against discharge when wages are garnished?
The CCPA prohibits an employer from firing an employee whose
earnings are subject to garnishment for any one debt, regardless
of the number of levies made or proceedings brought to collect
that debt, because of the single garnishment. The Act does
not prohibit discharge because an employee's earnings are
separately garnished for two or more debts.
What are the
restrictions on wage garnishment?
The amount of pay subject to garnishment is based on an employee's
"disposable earnings," which is the amount left
after legally required deductions are made. Examples of such
deductions include federal, state, and local taxes, the employee's
share of State Unemployment Insurance and Social Security.
It also includes withholdings for employee retirement systems
required by law. Deductions not required by law - such as
those for voluntary wage assignments, union dues, health and
life insurance, contributions to charitable causes, purchases
of savings bonds, retirement plan contributions (except those
required by law) and payments to employers for payroll advances
or purchases of merchandise - usually may not be subtracted
from gross earnings when calculating disposable earnings under
the CCPA.
The law sets the
maximum amount that may be garnished in any workweek or pay
period, regardless of the number of garnishment orders received
by the employer. For ordinary garnishments (i.e., those not
for support, bankruptcy, or any state or federal tax), the
weekly amount may not exceed the lesser of two figures: 25
percent of the employee's disposable earnings, or the amount
by which an employee's disposable earnings are greater than
30 times the federal minimum wage (currently $5.15 an hour).
For illustration, if the pay period is weekly and disposable
earnings are $154.50 ($5.15 X 30) or less, there can be no
garnishment. If disposable earnings are more than $154.50
but less than $206.00 ($5.15 X 40), the amount above $154.50
can be garnished. A maximum of 25 percent can be garnished,
if disposable income earnings are $206.00 or more. When pay
periods cover more than one week, multiples of the weekly
restrictions must be used to calculate the maximum amounts
that may be garnished. The table and examples at the end of
this fact sheet illustrate these amounts.
What about child
support and alimony?
Specific restrictions apply to court orders for child support
or alimony. The garnishment law allows up to 50 percent of
a worker's disposable earnings to be garnished for these purposes
if the worker is supporting another spouse or child, or up
to 60 percent if the worker is not. An additional 5 percent
may be garnished for support payments more than l2 weeks in
arrears.
Are there any
exceptions to the garnishment law?
The wage garnishment law specifies that the garnishment restrictions
do not apply to certain bankruptcy court orders, or to debts
due for federal or state taxes. If a state wage garnishment
law differs from the Federal CCPA, the law resulting in
the smaller garnishment must be observed. (this is often
cited as the Supremacy
Clause). You may be able to claim one or more exemptions
and avoid paying the judgment or at least a portion of it.
Bank Account
funds that are from:
Veterans Benefits
Child Support Payments
U.S. Government Pension
Unemployment Compensation
Supplemental Security Income (SSI)
Temporary Assistance for Needy Families
Certain funds in a joint or community account
Other public Assistance or Income allowed by State Law
In order to protect
your right to claim these exemptions you must, within 28 days
from the date on the Writ of Garnishment, deliver to the court
clerk and mail a copy to the plaintiff, the completed Exemption
Claim Form.
What about non-tax
debts owed Federal Agencies?
The Debt Collection Improvement Act authorizes federal agencies
or collection agencies under contract with them to garnish
up to 15% of disposable earnings to repay defaulted debts
owed the U.S. Government. The Higher Education Act authorizes
the Department of Education's guaranty agencies to garnish
up to 10% of disposable earnings to repay defaulted federal
student loans. Such withholding is also subject to the provisions
of the federal wage garnishment law, but not state garnishment
laws. Unless the total of all garnishments exceeds 25% of
disposable earnings, questions regarding such garnishments
should be referred to the agency initiating the withholding
action.
EXAMPLES OF AMOUNTS SUBJECT TO GARNISHMENT
BASED ON THE $5.15 AN HOUR MINIMUM WAGE
The following examples
illustrate the statutory tests for determining the amounts
subject to garnishment.
An employee's gross
earnings in a particular week are $235.00. After deductions
required by law, the disposable earnings are $205.00. In this
week $50.50 may be garnished, since only the amount over $154.50
may be garnished where the disposable earnings are $206.00
or less. The employee would be paid $154.50. An employee's
gross earnings in a particular workweek are $240.00. After
deductions required by law, the disposable earnings are $210.00.
In this week 25 percent of the disposable earnings may be
garnished. ($210.00 X 25% = $52.50) The employee would be
paid $157.50.
A garnishment order
is received after the second work day of the week. It requires
a garnishment based on wages earned up to that day be withheld.
The employee is paid $60.00 a day. Since less than $154.50
has been earned, no garnishment is permitted. However, if
another garnishment is received when the workweek is complete,
or in states where continuing garnishments are issued, the
employer will withhold on the basis of the earnings for the
entire week. An employee paid every other week has disposable
earnings of $400.00 for the first week and $40.00 for the
second week of the pay period, for a total of $440.00. In
a biweekly pay period, when disposable earnings are above
$412.00 for the pay period 25% may be garnished. It does not
matter that the disposable earnings in the second week are
less than $154.50 - 25% of the $440.00 ($110.00) is subject
to garnishment.
An employee on
a $320.00 weekly draw against commissions has disposable earnings
each week of $285.00. Commissions, paid monthly, total $2,000.00
for July after deductions required by law. Each draw and the
balance due at the monthly settlement are separately subject
to the law's restrictions. Thus, 25% ($71.25 in this example)
of each draw may be garnished. At the end of the month, the
$1,140.00 previously drawn is subtracted from the $2,000.00
settlement figure, and 25% of the balance may be garnished.
In this example, the garnishable amount is $215.00.
Pursuant to a garnishment
order (with priority) for child support an employer withholds
$90.00 a week from the wages of an employee who has disposable
earnings of $240.00 a week. A garnishment order for the collection
of a defaulted student loan is also served. The limit for
normal garnishments of 25% applies to the debt for the outstanding
student loan. Under the formula for normal garnishments, a
maximum of $60.00 (25% of $240.00) is garnishable. The $90.00
support payments may be withheld, because the normal restrictions
do not apply to court orders for support. No withholding for
the defaulted student loan may be made, because the amount
already withheld is more than the amount that may be withheld
for normal garnishments. Additional withholdings could be
made to collect support, delinquent federal or state taxes
and certain bankruptcy court ordered payments.
Where to Obtain
Additional Information
This publication is for general information and is not to
be considered in the same light as official statements of
position contained in the regulations. For additional information,
visit Wage-Hour website: http://www.wagehour.dol.gov and/or
call Wage-Hour toll-free information and helpline, available
8am to 5pm in your time zone, 1-866-4USWAGE (1-866-487-9243).
Protecting yourself
If you owe the money you should pay it. You should avoid
a wage or bank levy at all costs. You need to communicate
with the judgment
creditor and make alternative payment arrangements
before they have to sue you. If you have already been sued
then contact the creditor right away and make arrangements
to avoid a levy. In some circumstances, you can request that
a levy be reversed by claiming exemption. You will need to
show the court that you are unable to meet your living expenses
if levied. Not only does a garnishment affect your take
home pay and bank accounts but it is murder on your credit,
Once a judgment is filed against you it will remain
on your credit for 7 years from the date you finally pay
it. That can be a very long time.
Garnishments
can be filed every 30 days until the judgment is satisfied.
Most creditors will file the 180 day levy so they can get
the maximum time to take your money. Every time a judgment
creditor wants to rape your bank account, they must file a
new levy. Each levy is good for one shot only. While this
may be time consuming for the judgment creditor, it is well
worth it for them to pay the filing fees each time. You can
change several patterns to reduce your odds of having your
accounts seized. A judgment creditor cannot levy a bank
account that has an uninvolved party listed on that account.
If your bank account is being targeted and you have no desire
to open a new one then consider adding a child on your account
as a trust or co owner. Once a third party to the debt is
added to that account, it throws a wrench in the judgment
creditors plan to seize your funds. If a judgment creditor
knows your bank account number then they will continue
to target your account until the debt is satisfied. Adding
a trust to your account and then notifying the judgment creditor
that they are seizing an account with a third party on it
should stop the levies unless of course that third party is
your spouse.
The Law: Sec. 1673. - Restriction
on garnishment
(a)
Maximum allowable garnishment
Except as provided
in subsection (b) of this section and in section 1675 of this
title, the maximum part of the aggregate disposable earnings
of an individual for any workweek which is subjected to garnishment
may not exceed
(1) 25 per centum
of his disposable earnings for that week, or
(2) the amount
by which his disposable earnings for that week exceed thirty
times the Federal minimum hourly wage prescribed by section
206(a)(1) of title 29 in effect at the time the earnings are
payable,
whichever is
less. In the case of earnings for any pay period other than
a week, the Secretary of Labor shall by regulation prescribe
a multiple of the Federal minimum hourly wage equivalent in
effect to that set forth in paragraph (2).
(b)
Exceptions
(1) The restrictions
of subsection (a) of this section do not apply in the case
of
(A) any order
for the support of any person issued by a court of competent
jurisdiction or in accordance with an administrative procedure,
which is established by State law, which affords substantial
due process, and which is subject to judicial review.
(B) any order
of any court of the United States having jurisdiction over
cases under chapter 13 of title 11.
(C) any debt
due for any State or Federal tax.
(2) The maximum
part of the aggregate disposable earnings of an individual
for any workweek which is subject to garnishment to enforce
any order for the support of any person shall not exceed -
(A) where such
individual is supporting his spouse or dependent child (other
than a spouse or child with respect to whose support such
order is used), 50 per centum of such individual's disposable
earnings for that week; and
(B) where such
individual is not supporting such a spouse or dependent child
described in clause (A), 60 per centum of such individual's
disposable earnings for that week;
except that,
with respect to the disposable earnings of any individual
for any workweek, the 50 per centum specified in clause (A)
shall be deemed to be 55 per centum and the 60 per centum
specified in clause (B) shall be deemed to be 65 per centum,
if and to the extent that such earnings are subject to garnishment
to enforce a support order with respect to a period which
is prior to the twelve-week period which ends with the beginning
of such workweek.
(c) Execution
or enforcement of garnishment order or process prohibited
No court of the
United States or any State, and no State (or officer or agency
thereof), may make, execute, or enforce any order or process
in violation of this section. See
full Act here>>
Seeking help
from Wage Garnishments If you are in serious debt, suffering from lawsuits and
garnishments you can consult with a qualified debt
reduction specialist. He can negotiate
with your creditors to pay back the debts through a debt payment
plan or a consolidation
of debts. This can solve many problems and stop
wage levies. The specialist will act as your middle
man and work with all your creditors to repay the debts. This
is a much better route then avoiding the issue and being sued.
To speak with a specialist, free of charge just complete our
consultation form.
The agency is non profit and can give you some additional
answers. There are several alternatives to dealing with
debt overload. Debt
management is the best way to reduce the debts faster
and also educate yourself so you do not repeat the same mistakes
later. Statistics show that people who are in debt will be
back in debt two years after successfully paying it off.
Another method
is debt negotiations.
This requires that you have some money set aside but many
people use a debt negotiator
to cut a debt by up to 60% and settle it once and for
all. The specialized debt negotiator offers
free consultations and has been working out debt issues
for over a decade.
Finally, there
is bankruptcy.
While bankruptcy is serious and should only be used when absolutely
necessary, it does bring relief to many. Just be sure you
consider all avenues and ramifications before you file. We
have a bankruptcy finder that can get you a consultation,
free of charge in your area. Consult
with a bankruptcy specialist now
Please note
that this information about wage garnishments and levies is
for informational purposes only and should never replace your
need for a qualified attorney. If you have a legal issue
or one that requires a legal opinion, please consult with
a qualified
attorney about your situation.
Some
portions of this information have been obtained from the Dept
of Labor.
