Wage Garnishment: How It Works and What You Can Do
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Wage garnishment happens when a court orders that your employer withhold a specific portion of your paycheck and send it directly to the creditor or person to whom you owe money, until your debt is resolved.
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. And you can take steps to lessen the effect and help you bounce back.
Types of wage garnishment and how it happens
Wage garnishment is more common than you might think. A report by ADP Research Institute found that 7% of the 12 million employees it assessed had wages garnished in 2016. For workers ages 35 to 44, the number hit 10.2%. The top reasons were child support; consumer debts and student loans; and tax levies.
» MORE: How to stop a wage garnishment
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 child support, back taxes or a balance on federal student loans.
The court will send notices to you and your bank or employer, and the garnishment will begin in five to 30 business days, depending on your creditor and state. 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 taxes and Social Security.)
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 $289.99 and $217.51, the amount above $217.51 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%.
The Internal Revenue Service will determine the amount taken based on standard deductions and the number of dependents you have.
State laws around garnishment vary greatly. Your state may have additional protections that shelter more of your income or bank account balance, or it may offer exemptions for situations like being head of household with dependent children. In most cases, debtors must learn about exemptions and ask for them on their own. Nonwage garnishment, which is less common, is generally less regulated and has fewer restrictions for creditors.
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 and veterans benefits, are exempt from garnishment as income. However, they could be subject to seizure once in your bank account.
You can’t be fired for having one wage garnishment, but you’ll lose this protection if you incur more than one garnishment.
If you believe the judgment was made in error or it’s causing undue harm to your finances, you can challenge the garnishment.
What to do when you get a garnishment judgment
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 may want to consult a consumer law attorney or local legal aid to determine what’s best for you. You have three main options:
Work out a different deal
Contact your creditors. "A lot of consumers underestimate the power of a conversation," says Tara Alderete, director of enterprise learning at the nonprofit financial counseling agency Money Management International. "Look at a budget, see how much you owe, what you can pay, and then just call the creditor to see if you can work out a payment plan. Creditors and consumers always have that ability."
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.
It can be embarrassing to have your employer know you’ve been sued for debt, but it’s best to be honest with your manager or human relations department.
"Wage garnishment can cause stress in the work environment, so be proactive in talking with your employer," Alderete says. "Have a conversation where you say what’s happening and that you don’t want it to become a problem."
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. From there, you can take out products such as a secured credit card to work on restoring your credit.