Wage Garnishment: How It Works and What You Can Do
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What is wage garnishment?
Wage garnishment is when a court orders that your employer withhold a portion of your paycheck and send it directly to the creditor or person to whom you owe money.
Child support, consumer debts and student loans are common sources of wage garnishment. Your earnings will be garnished until the debt is paid off or otherwise resolved.
You have legal rights, including caps on how much can be taken at once. You can also take steps to lessen the effect and help you bounce back.
Types of wage garnishment and how it happens
There are two types of garnishment:
In wage garnishment, creditors can legally require your employer to hand over part of your earnings to pay off your debts.
In nonwage garnishment, commonly referred to as a bank levy, creditors can tap into your bank account.
Garnishment often happens when a creditor sues you for nonpayment of a debt and wins in court. Sometimes, though, a creditor can force garnishment without a court order, for instance, if you owe back taxes or a balance on federal student loans.
The court will send notices to you and your bank or employer. The garnishment can begin the first payday after the employer gets the court order. The garnishment continues until the debt, potentially including court fees and interest, is paid.
How much of your wages can be garnished?
Here’s an overview of the federal limits on how much of your disposable income a creditor can take. (When it comes to wage garnishment, “disposable income” means anything left after the necessary deductions such as Social Security, Medicare and other federal and state taxes.)
Type of debt | Percent of weekly disposable income that can be taken |
|---|---|
Credit card and medical bills, personal loans and most other consumer debts | Either 25% or the amount by which your weekly income exceeds 30 times the federal minimum wage (currently $7.25 an hour), whichever is less. Here’s how that breaks down: • If your weekly disposable income is $290 or more, a maximum of 25% is taken. • If it's between $217.51 and $289.99, the amount above $217.50 can be taken. • If it's $217.50 or lower, garnishment is not allowed. |
Child support and alimony | Up to 50% if you are supporting another child or spouse; otherwise, up to 60%. If you are more than 12 weeks late in payments, an additional 5% may be taken. |
Federal student loans | Up to 15%. |
Taxes | The Internal Revenue Service will determine the amount taken based on your filing status and the number of dependents you have. |
What you can do about wage garnishment
You have some rights in the wage garnishment process, but in most states, it’s your responsibility to be aware of and exercise these rights .
You have to be legally notified of the garnishment.
You can file a dispute if the notice has inaccurate information or you believe you don’t owe the debt.
Some forms of income, such as Social Security, Supplemental Security Income and veterans' benefits, are exempt from garnishment as income. However, they could be subject to seizure once in your bank account if you don't receive these benefits via direct deposit.
You can’t be fired for having one single wage garnishment.
What to do when you get a garnishment judgment
If you believe the judgment was made in error or it’s causing undue harm to your finances, you can challenge the garnishment.
First, carefully read the judgment to verify that all of the information is accurate. Make sure that it’s not something you already paid and that it’s in fact your debt. If it is, consider how much money will be taken and what it will mean for your financial situation.
Then, weigh what to do next. If you haven’t done so before, you might want to consult a consumer law attorney or local legal aid to determine what’s best for you. You can also get attorney referrals from the American Bar Association or the bar association in your state.
You have three main options:
Work out a different deal
Contact your creditors to negotiate. You could look at your budget, see how much you can afford to pay and see if the creditor will agree to a payment plan.
Challenge the judgment
If you believe the garnishment was made in error, will cause undue harm or is being improperly executed, you can object in court. You’ll have to act quickly. You may have as few as five business days to contest the ruling.
Accept the garnishment
You can pay off the garnishment in installments as the judgment states or pay in a lump sum. Borrowing money from a family member or taking out a personal loan to pay off the judgment, which is possible even with the garnishment on your credit report, could give you quick relief from the stress of a prolonged series of payments.
If wage garnishment is a financial burden
If you don’t see a path forward from wage garnishment, consult the free services of a nonprofit credit counselor to discuss your debt relief options, such as a repayment plan or bankruptcy.
A garnishment judgment will stay on your credit reports for up to seven years, affecting your credit score. But there are a few easy ways to bolster your credit, both during and after wage garnishment.
Building a budget — and sticking to it — can help you stay on top of your finances to avoid another garnishment. And if typical budgeting advice doesn’t work for you, it’s OK to tailor it to your needs.
From there, you can take out products such as a secured credit card to work on restoring your credit. It may also be beneficial to look for ways to increase your income, via a second job or a side hustle.
» Ready to get started? See our picks for the best secured credit cards.
