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Wage garnishment laws, earnings protection & seeking help

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?
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 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 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.

Facts About Wage Garnishment Title III, Consumer Credit Protection Act (15 USC §1671 et seq; 29 CFR 870) Garnishment Laws by State | A complete list of garnishment laws by state for debtors and employers to review their state specific garnishment laws. FAQ Judgments: How to remove judgments from your credit reports. Military garnishment & FAQ. Find out specific rights for military personal	Want to know your statute of limitations to collect a debt? Or the Statute of a judgment in your state? Click here for your states statute.  Visit the Dept of Labor to find out more about wage garnishments FAQ on Tax Liens Find an Attorney in your area & free court docs