Creditor Garnishments

If you owe a debt to someone, that person (your creditor) might go to court to have some of your wages withheld from your paycheck and sent to him or her.  This is called a creditor garnishment.  These require your employer to withhold the amount you owe from your take-home pay, up to a certain legal maximum (see below).

When withholding begins, and when it ends.  Your employer will receive a court notice explaining the reason for the garnishment and the total amount of your debt.  Your employer should give you a copy of this notice, and then begin withholding wages.  This deduction ends when you've paid off your entire debt.

The part of you pay that is subject to creditor garnishments.  The maximum amount of your take-home pay that can be garnished in a week is the smaller of the following two possibilities:

• 25% of your weekly disposable earnings, or
• your weekly disposable earnings minus $175.50 (30 times the current federal minimum wage of $5.85).

These amounts can be adjusted if you're not paid on a weekly basis.  State law can't allow a higher limit on creditor garnishments than the one described above, but can set a lower limit.  In some states, this type of involuntary deduction is illegal.

If you're paid by the hour, be careful.  Creditor garnishments may reduce your earnings below the minimum wage level.  This is possible because the amount withheld is considered to be part of your wages.  If your employer deducts more than the federal limit, though, the extra amount withheld isn't thought of as part of your earnings.  This extra deduction can't push your pay level below the minimum wage.

Creditor garnishments and other involuntary deductions.  Your employer has to deduct for a child support withholding order, a tax levy, or a bankruptcy order before turning to a credit garnishment.  If any one of these other deductions, or a combination of them, amounts to 25% or more of your take-home pay, you employer can't withhold anything for the garnishment.

Multiple garnishments.  No matter how many garnishments are issued against your, the limit outlined above still applies.  If your employer is already withholding the maximum amount from your wages, and then receives another garnishment, nothing can be deducted for the second garnishment.  The order in which garnishments have to be paid varies in different states.

Your employer can't fire you because your earnings are subject to garnishment for a "single" debt, no matter how many garnishments are issued to collect it.  A "single" debt usually means one debt owed to one creditor, but a single debt also results when several creditors combine their debts in one "garnishment action."  It's also considered a single debt when one creditor combines a number of debts into one garnishment.