How Much Can Be Garnished From Payroll?
Garnishment -- the withholding of a person's wages or assets to satisfy a debt -- is a costly and time-consuming process that varies by state. Garnishments must be issued by a court and can be authorized to recover debts or to compel payment of child support. However, most garnishments can be avoided through negotiation with a creditor.
Other People Are Reading
-
Garnishments
-
A garnishment is a court-ordered withholding of a portion of a person's salary or wage by an employer, typically in satisfaction of a debt. Bank accounts, wages, tax refunds and vehicles are subject to garnishment. The typical garnishment process starts with a creditor unsuccessfully demanding payment of a debt. If a settlement cannot be reached, the creditor can go to court and win a judgment against the debtor; if this judgment is not satisfied, then the creditor can request a garnishment levy.
Reasons for Garnishment
-
The most common cause of wage garnishments is child support. Most courts aggressively order wage garnishments to satisfy delinquent child-support or alimony payments. Other common reasons include delinquency on consumer debt, collection efforts for back taxes and satisfaction of court judgments.
-
Federal Law
-
The Consumer Credit Protection Act sets the general limits on most forms of wage garnishment, including protections against employee termination because of a single garnishment. The amount that can be garnished is based on an employee's disposable income -- income left over after taxes, but before voluntary contributions like insurance, charitable contributions or payroll advances. The maximum amount that can legally be garnished is the lesser of 25 percent of an employee's disposable earnings, or the amount by which those earnings are more than 30 times the federal minimum wage.
However, up to 60 percent can be taken in cases of child support and alimony, unless the worker is supporting a second family, in which case only 50 percent may be garnished -- and, for child-support payments more than three months late, an additional 5 percent may be taken.
State Law
-
Each state has its own laws governing garnishment levies. For example, in Michigan, all garnishment orders expire 91 days after issuance, whereas in Colorado, they remain effective until the debt is discharged. In New York, the maximum recoverable is 10 percent of gross income, whereas in Oklahoma the rate is 25 percent. Because of the variability of state garnishment laws, seek a lawyer's help if you are faced with a possible levy.
Options
-
Garnishment is an expensive and complicated process for everyone involved. If you are facing a possible garnishment, talk directly to your creditor or to a government agent to negotiate some sort of payment plan. Most creditors would prefer a structured settlement over the hassle and cost of a garnishment levy.
In extreme cases, bankruptcy can discharge some or all personal debt, and clear away any existing garnishments. However, not all debts can be discharged by bankruptcy -- student loans, for example, generally cannot be brushed aside.
-
References
Resources
More Like This
Comments
-
bbstkkr
Oct 05, 2009
I divorced in 2002. In our divorce decree, it states that my former spouse is to get 48% of my Navy Retirement. Now, 7 years later, she will start getting it. Why now? The reason I was given was, her attorney sent in the paperwork to be filed, but "it got lost in the mail". Now for the question I have. She is sueing me for $40,000.00 back pay. From the time we divorced in 2002 until now(2009) Can she do that? If so, can she get my Federal Income Tax and/or have my wages garnished?
