How to Calculate a Federal Wage Garnishment?
Although creditors will typically respond to late debt payments with letters and phone calls, the consequences can be more dramatic if you allow a credit account to become severely delinquent. After you miss several payments -- usually six or more -- your creditor may obtain a legal judgment against you for the debt by filing and winning a civil lawsuit. In most cases, a creditor with a valid judgment can garnish a portion of your wages. Federal laws restrict the maximum amount a creditor can garnish.
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Instructions
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Check your paystub to determine your weekly or biweekly earnings. Under federal law, if you earn less than 30 times the federal minimum hourly wage each week, a creditor cannot garnish any portion of your wages. If you are paid biweekly, earnings below 60 times the federal minimum hourly wage per pay period are exempt from garnishment.
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Multiply your weekly or biweekly earnings, after taxes, by 0.25 if you earn more than the federal earnings threshold. For example, if you earn $1,000 per week, 25 percent of this amount equals $250 per week.
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Subtract the federal earnings threshold amount from your earnings. For example, if you are paid $300 weekly and the current federal minimum hourly wage is $7.25, subtract $217.50 from $300, which gives you $82.50.
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Determine whether your earnings above the federal earnings threshold are more or less than 25 percent of your post-tax income. If the difference between your earnings and the federal threshold is less, this is your maximum federal wage garnishment. If the difference exceeds 25 percent of your post-tax income, the creditor can garnish a full 25 percent of your earnings after taxes.
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Tips & Warnings
Keep in mind that state laws may place greater restrictions on wage garnishment than federal law. For example, Texas, Pennsylvania, South Carolina and North Carolina provide complete exemption from wage garnishment for most debts.
Remember that federal law places different rules on garnishment for certain types of debt, such as child support and delinquent taxes. Your wages may be subject to a maximum garnishment of 60 percent if you owe these debts.
