Can Wages Be Garnished If a Judgment Is Not in Place?
A wage garnishment is a legal procedure, which orders an employer to withhold a specific amount of an employee's wages to fulfill a debt she owes. The issuing agency typically sends the employer a copy of the garnishment order once the garnishment has been enforced. In many cases, the garnishing company or individual must obtain a judgment to garnish wages.
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Identification
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Creditors--such as those collecting for unsecured personal loans, credit cards and medical bills--must go to court and file a lawsuit against the debtor to garnish his wages. The official decision the judge makes at the end of the lawsuit can result in a judgment for the plaintiff or the defendant. A creditor must obtain this judgment to garnish wages; it cannot garnish otherwise. Parents seeking child support or alimony withholding must obtain a judgment from the court.
Exceptions
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Federal and state entities--such as the Internal Revenue Service, state taxation agency and the U.S. Department of Education--do not need a judgment to garnish wages. The IRS and the state taxation agency generally use the term "levy" when referring to a garnishment. Legal agencies that do not need a judgment to garnish wages are required to satisfy some legal criteria before garnishing. This includes evaluating the amount due, sending the debtor a bill demanding payment and issuing a garnishment/levy notice prior to garnishing.
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Employee Options
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When a creditor files a lawsuit against a debtor, the court sends the latter a copy of the suit. The paperwork tells the debtor how to file an answer, if she would like to contest or discuss it. The court usually gives 45 days in which to do so. Federal and state agencies include instructions on how to appeal a wage garnishment/levy in the garnishment/levy notice. For example, the debtor must file an IRS wage levy within 30 days of the levy notice date with the appeals office stated on the paperwork. The employee can file a hardship claim with the issuing agency, if the wage garnishment is causing her hardship.
Limits
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Title III of the Consumer Credit Protection Act says the employer cannot garnish more than 25 percent of disposable income per pay period for ordinary wage garnishments, such as those from creditors. Disposable income is the employee's wages after payroll taxes and pretax voluntary deductions have been withheld. The employer can deduct up to 50 or 60 percent for child support and alimony, and an extra five percent for support payments over 12 weeks late. The IRS and the state taxation agency instruct the employer on how to make the deduction. The IRS, for example, requires employers to use its Publication 1494 to determine the amount of pay exempt from the levy. The employer can garnish up to 15 percent of disposable pay for federal student aid.
Considerations
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The garnishment order usually states the amount to deduct and when payment should begin. This is typically by the employee's next regularly scheduled paycheck. Although the employer usually processes wage garnishments in the order received, child support and tax levies take priority over all other garnishments.
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