How Much Can Wage Garnishments Take From My Paycheck?
A wage garnishment gives your employer the legal right to withhold wages from your paycheck to satisfy a debt you owe. Legal entities, such as the U.S. Department of Education, state taxation agency and the Internal Revenue Service do not need a court order to garnish wages, but creditors do. The maximum amount your employer can withhold depends on federal and state laws.
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Federal Law
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Title III of the Consumer Credit Protection Act is the federal law that governs wage garnishment limits. Your employer can withhold the lesser of the total by which your disposable income is greater than 30 times the federal minimum wage or 25 percent of your disposable earnings. It can withhold up to 50 to 60 percent for child support and alimony and an additional 5 percent for support payments over 12 weeks late. Title III also protects you from discharge if your employer receives one wage garnishment against you. You lose the protection if it receives more than one wage garnishment against you.
State Law
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Creditors and debt collectors, such as for personal loans, medical bills and credit cards, cannot garnish your wages if your state does not allow it. Child support withholding and tax levies are usually allowed even if the state does not allow wage garnishments. The state may set a different limit for wage garnishments, such as 15 percent of disposable income instead of 25 percent. When federal and state law applies, your employer uses the smaller amount. State law may also give the employee additional discharge benefits.
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Withholding Calculation
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To arrive at your disposable earnings, your employer deducts all legally required deductions, such as federal income tax, Social Security tax, Medicare tax and state retirement systems from your gross pay. It multiplies the remainder by the required percentage to arrive at the withholding amount. Some garnishment notices indicate a flat amount to withhold. Your employer uses IRS Publication 1494 to determine the amount of your pay that is exempt from an IRS wage levy.
Employee Options
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State laws vary, but in all cases, the court lets you know that a creditor or debt collector has sought a judgment against you, and gives you an opportunity to respond. If you fail to respond, and the court agrees with the plaintiff's claim, the wage garnishment is enforced. To avoid a wage garnishment, promptly contact the garnisheeing party and try to make a payment arrangement or make an offer to settle the debt for less than you owe. If the garnishment is causing you financial hardship, contact the issuing court for procedures on filing a hardship claim. If the garnishment is from a legal entity that does not need a court order to garnish, contact the agency directly to appeal the garnishment or file a hardship claim.
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