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Wage Garnishment

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An unfortunate result of defaulting on a loan, not paying taxes, or getting behind on payments is wage garnishment. A wage garnishment is a process granted by a court order by which a lender obtains, directly from an employer, part of the salary of an employee who defaulted on payments to the lender. While royalties and investment checks can also be garnished, and voluntary wage garnishments (employees voluntarily agree that their employers may turn over an agreed upon amount of their earnings to a creditor or creditors) are not uncommon, an involuntary wage garnishment is the most common type of garnishment in America today.

A wage garnishment can go into effect at anytime, but it can only terminate once the debt is paid in full either through the garnishment process or if the debtor voluntarily pays the debt in full. Wages can be garnished for a number of reasons, including nonpayment of child support, unpaid taxes, unpaid court fines, defaulted student loans, and other various types of money judgments.

In general, a court must order the employer of a person whose wages are being garnished to reduce the wages. The employer must then send the garnished amount to the person owed. In the United States, a wage garnishment cannot exceed 25 percent of the disposable income that an employee earns. However, several states observe maximum thresholds that are lower than the 25 percent maximum provided by federal law, and in others child support cases can go up to 50 percent. Additionally, the states of North and South Carolina, Texas, and Pennsylvania only allow wage garnishments for child support, court-ordered fines, federally guaranteed student loans, and restitution for a crime the debtor committed. Creditors cannot initiate a wage garnishment in these states.

There are a few pros and cons to consider if there is a threat of having your wages garnished. The best way to safeguard your wages against a wage garnishment is to, of course, pay the debt. Keep in mind that a creditor has to file the wage garnishment every 30 days until the judgment is satisfied. You can also work out a payment plan with the creditor that you owe before it gets out of hand. Don't attempt to hide assets or take a job getting paid under the table to avoid garnishments. This is illegal and if caught, it could cost you jail time. If you need help, contact a credit or debt attorney in your area.

Each state has its own laws regarding wage garnishment, so knowing your rights is essential in cases like this. Some creditors may try to take more than they're allowed, if they know you don't have anyone to represent you. It's important to consider hiring a tax attorney or bankruptcy lawyer if it seems you may be headed for wage garnishment. Someone who knows the inner workings of the law and legal system will be able to fairly defend your case to insure you're not required to pay more than necessary, so you can keep your life on track.