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What is wage garnishment? - Avvo

What is wage garnishment?

Wage garnishment is a process where your employer sends part of your paycheck directly to your creditors in order to pay off your debts. In other words, wage garnishment is the legal use of part of your wages to repay your debts.

Wage garnishment is very common, and the number of wage garnishment cases is growing as more private companies turn to this legal process to recover consumer debts.

Why does wage garnishment occur?

Wage garnishment happens when a person has an outstanding debt. Garnishment is considered a last resort to recover debt, entered into only after other avenues (such as negotiation) have been exhausted.

What kinds of debts cause creditors to sue?

Garnished wages may occur to repay a variety of debts. These include:

  • Outstanding student loans
  • Tax debts
  • Outstanding child support
  • Outstanding alimony payments
  • Unpaid criminal fines
  • Credit card debts
  • Outstanding car payments
  • Unpaid medical bills
  • Unpaid rent

When does wage garnishment happen?

Any outstanding debt can be subject to wage garnishing. There is no minimum balance.

Wage garnishment is considered a last resort for creditors looking to recover their debts. Typically, creditors will only start wage garnishment proceedings if a debt is severely delinquent, 6 months or more overdue.

Wage garnishment state laws determine the process creditors need to follow to garnish a debtor's wages, including the length of time it takes to start collecting payment.

Garnishment typically occurs following a court order. However, some official bodies such as the US Department of Education and the Internal Revenue Service do not need a court order before garnishing wages. In these cases, the debtor must be notified at least 30 days before their wages are affected.

The process and times for obtaining a judgment on a garnishment case varies from state to state. The creditor is told to notify the debtor of the case within a set time, such as 10 days before the trial. The trial date could be 3 to 4 weeks, or even more, after the lawsuit's filing.

After a court makes its judgment, the creditor may be required to send you a notice of court proceedings. The creditor may then be required to wait a predetermined period, such as 15 days after mailing the notice, before garnishing wages. However, in some states there's no need to file a notice, and creditors can file a garnishment order with the debtor's employer immediately after a judge's ruling.

The withholding period begins once the debtor's employer, or garnishee, receives the garnishment order. The garnishee must withhold according to the garnishment order's instructions. For example, the garnishee might be required to collect a portion of wages starting from the employee's next scheduled pay day.

How does wage garnishment occur?

After the issue of a garnishment order, the debtor's employer will receive a notice from the sheriff or another local official explaining that their employee is in debt and their wages should be garnished.

The garnishee is ordered to set aside a portion of the debtor's wages or salary each payment period. They are required to calculate the appropriate sum for repaying the debtor's debt in installments.

These payments may be sent to the court or to an intermediate agency for processing, usually on a weekly basis. If the employer does not follow the garnishment order, they may face legal action.

What types of income can be garnished?

Wage garnishment is the most common form of income garnishment, but it is not the only type of income that can be garnished to repay a debt.

The following types of income can be garnished:

  • Bonuses and commissions
  • Severance pay
  • Investment income, including rental income and stock dividends
  • Inheritance

The following income types are exempt from garnishing:

  • Supplemental Security Income benefits
  • Child support payments received
  • Injury settlements
  • Tips, in most states
  • State public assistance, in most states
  • Workers compensation payments, in most cases
  • Unemployment benefits, in most cases

In addition, some forms of income can be used only to pay child support and tax debts. These income types are:

  • Social Security disability benefits
  • Income from pensions and other retirement accounts
  • Veteran's Administration benefits
  • Spousal support payments received

Bank accounts can also be garnished to repay debts, although income from the last 2 months that would normally be exempt can be withdrawn by the account holder.

Whether you're already facing wage garnishment proceedings or you're worried about it occurring in the future, a clearer understanding of this legal process will serve you well.

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