Wage garnishment is the withholding of wages to pay a debt, usually by court order. If your wages are garnished or you are threatened with wage garnishment it is important to understand your rights and your legal options.
In the United States the Federal Consumer Credit Protection Act (CCPA) limits the amount that may be garnished. A creditor may garnish up to 25% of an employee’s disposable earnings or disposable earnings greater than 30 times the federal minimum wage ($7.25 per hour). Disposable earnings are defined as the amount left after legally required deductions for taxes, unemployment insurance and social security. Payroll deductions for health insurance, life insurance, retirement or savings are not included.
The CCPA protects employees from being fired for garnishment of any one debt. Be advised creditors can garnish earnings for the same debt multiple times, which would be protected under the federal law. The CCPA does not protect employees from termination if they have multiple garnishments for different debts, even if they are from the same creditor.
U.S. State Laws regarding wage garnishment vary greatly.. It is important to talk to an attorney in your state to determine which laws apply to you and your debt.
You may be exempt from garnishment. State law may exempt some individuals from wage garnishment. It is important to speak with a lawyer to find out the criteria in your state and the process to file for an exemption.
In most cases government benefits cannot be garnished. The primary exception is garnishment for back taxes or default on government backed student loans. If you owe back taxes or have defaulted on student loans it is vital that you come up with a plan for repayment before garnishment begins.