WAGE GARNISHMENT LAWS
The Federal Wage Garnishment Law, Consumer Credit Protection
Act's Title 3 (CCPA)
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.
Which Federal law regulates wage garnishment?
Title III of the Consumer Credit Protection Act 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 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 CCPA, the law resulting in the smaller
garnishment must be observed. 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. 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
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. 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. It's an easy trap
to fall into. 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. 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.
Notice:
These pages are protected. Do not plagiarize or redistribute
elsewhere.
|
