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Home / Debt / Wage Garnishment – What it is and What You Need to Know


There is nothing more sinister sounding than a wage garnishment. Even more sinister is having to live through one. More people are dealing with wage garnishments now than in the past; perhaps in part due to the lingering effects of the last recession or a lack of financial education. One of the scariest aspects of a wage garnishment is not knowing what it is, how much can be taken, or how one can be resolved. We thought that offering a better understanding of a wage garnishment might help a few of our readers, so here you go.

Definition of a Wage Garnishment?

The best place to start is at the beginning. According to the United States Department of Labor:

”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.”

It is important to note that a debt collector must make feasible attempts to allow you to pay the debt prior to seeking a wage garnishment and that the courts will allow you to show that a garnishment will cause you undue hardship.

Wage Garnishment for Different Types of Debt

Every creditor has the option to seek a wage garnishment, but different debts have different paths to take before a garnishment is sought. A general time line between default and wage garnishment depends on the type of debt. For example, no garnishment can be sought for debts less than 90 days past due. After that:

  • Credit card companies will hire a debt collection agency.
  • Medical debt will be sold to a collection agency.
  • Mortgage holders have the option to go straight to wage garnishment, but normally foreclose, then consider a wage garnishment if the home sells for less than the loan’s value, called the ”deficiency” balance.
  • Auto loan default results in a repossession. After that, the vehicle will be sold at auction and a garnishment may be sought to satisfy any remaining balance.
  • Student loans end up with a collection agency. After several unsuccessful attempts to collect from you, they will get a wage garnishment of up to 15 percent of your disposable income.
  • Federal tax debt can become very serious, very quickly. To satisfy your debt, your future returns will be taken as offsets. If that doesn’t satisfy your debt quickly enough, your bank accounts can be taken. If that doesn’t do it, up to 25 percent of your wages can be garnished. There is also the possibility that you may be sent to jail for unpaid taxes.

Prior to Garnishment

Lenders rarely move to wage garnishment themselves. That is left to the collection agents they hire or sell the debt to. These agents must give you ample opportunity to satisfy the debt prior to garnishment. This will include mailing you bills and making a lot of phone calls over a span of at least 90 days. If these tactics fail, then the agent may move to get a judgment from a court. You will be sent a notice from the court about your hearing date, so that you can contest the judgment. Since this will be your last chance to avoid a garnishment, do not ignore this notice.

There are two items to be aware of at this point. First, the IRS and the Department of Education are not required to get a court judgment to garnish your wages. Second, being unemployed does not exempt you from garnishment; your bank accounts can be frozen, then emptied.

There Are Limits to a Wage Garnishment

There are legal guidelines that limit the amount of your wages that can be taken. There is even a ”pecking” order that spells out who gets their money first.

Again, the United States Department of Labor helps us out by defining the limits to wage garnishment as:

”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.”

Additionally, no matter how many garnishments against you, there are limits to the amount of money that can be taken out of your paycheck. The maximum amounts are:

”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.”

Wage Garnishment Pecking Order

The ”pecking” order mentioned earlier includes:

  1. Child support orders are paid first.
  2. Next to be paid are federal tax debts.
  3. Then state tax debts.

After those items are satisfied, and as long as no more than a total of 50 percent of your disposable income has been taken, other garnishments can be applied.

One last nasty side effect of wage garnishment is that you can be fired for it. Employers are legally barred for firing an employee for the first garnishment, but you can be terminated after that. The notable exception is for child support.

Contesting Wage Garnishment

Many of us have or will face a potential wage garnishment, but they can be avoided in most instances. The key is to never ignore bills from creditors. Even if you are behind and see no end in sight, contacting them can prevent a garnishment. Should a debt collector move to get a judgment, go to the court hearing. Take any form of proof that you can think of to show that the garnishment would destroy an already precarious financial situation. Most people who contest a wage garnishment can avoid them.


About the author: Jerry Coffey


Jerry Coffey spent many years in a debt-riddled gray area somewhere between broke and desperately broke. His seemingly endless need for more and more cash led him to payday loans, repossessions, bankruptcy, and depression. After years of the same financial style, he heard a piece of advice that inspired him to find a way to change. The advice: ''The very definition of a fool is someone who continues to do the same things, but expects different results.'' This led him to a much more frugal lifestyle that sees all of his bills paid on time and a growing savings account. Even the seed of a retirement account has begun to sprout.


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