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Wage Garnishment: How it is Operated and What You Can Do

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Wage Garnishment: How It Works and What You Can Do
The wage garnishment process is a court judgment mandating that a percentage of your earnings be diverted to settle the outstanding credit.
by Sean Pyles Senior Writer | Personal finances and debt Sean Pyles leads podcasting at NerdWallet as the producer and host of NerdWallet's "Smart Money" podcast. On "Smart Money," Sean talks with Nerds on the NerdWallet Content team to answer listeners' personal finance questions. With a particular focus on sensible and practical advice on money, Sean provides real-world guidance that can help consumers better their financial lives. In addition to answering listeners' financial questions on "Smart Money," Sean also interviews guests who are not part of NerdWallet and produces special segments to explore topics such as the racial gap in wealth as well as how to get started investing and the history of student loans.
Before Sean was the host of podcasting for NerdWallet, he covered topics concerning consumer debt. His work has been published in USA Today, The New York Times and other publications. When Sean isn't writing about personal finance, Sean can be found working in his garden, going for walks, or taking his dog for long walks. He is based at Ocean Shores, Washington.





Sep 19, 2022


Edited by Kathy Hinson Lead Assigning Editor Personal finances, credit scoring financial management and debt Kathy Hinson leads the core personal finance team at NerdWallet. Prior to joining NerdWallet, she worked for 18 years with The Oregonian in Portland in capacities such as chief of the copy desk and team leader for design and editing. Previous experience included news and copy editing for many Southern California newspapers, including the Los Angeles Times. She received a bachelor's degree in mass communication and journalism in the University of Iowa.







A majority of the products featured here are provided by our partners who compensate us. This influences which products we feature and where and how the product is featured on the page. However, this does not affect our assessments. Our opinions are entirely our own. Here is a list of and .



Wage garnishment happens when a judge orders your employer withhold a specific amount of your pay and send it directly to the person or creditor who you owe money until the debt is settled.
Child support as well as consumer debts and student loans are common sources of wage garnishment. Your earnings will be garnished until the debt is paid off or, if not resolved, repaid.
You are protected by law which include caps on how much can be taken at once. There are steps you can take to reduce the effects and help you bounce back.
Ready to conquer your debt?
Monitor your balances and spend in one place to see how you can get rid of the debt.






Different types of garnishment of wages and how it happens
Garnishing your wages is more frequent than you believe. A study by ADP Research Institute found that 7 percent of the 12 million workers it assessed had the garnishment of their wages in the year 2016. For workers ages 35 to 44 The number was 10.2%. The top reasons included child support, consumer debts and ; and .
>> MORE:
There are two kinds of garnishment:
In wage garnishment , creditors are able to legally require your employer to transfer a portion of your income to settle your obligations.
In nonwage garnishment , commonly called a bank levy, creditors may tap into your bank account.

It is usually the case when a creditor sues you for non-payment of a debt and wins in the court. Sometimes, however, a creditor can demand garnishment without a court order for example, if you have outstanding child support, back taxes or the balance of the federal student loans.
The court will send notices to you as well as your employer or bank and the garnishment process will start in five to 30 business days, depending on the creditor you have chosen and your state. The garnishment will continue until the entire debt, including court costs and interest to be paid.
How much of your salary can be garnished?
Here's a brief outline of federal limits on the amount of your available income you can let a lender take. (When it comes to wage garnishment "disposable income" means anything left after deducting the required deductions, such as taxes and Social Security.)
Kind of debt



Percentage of the weekly disposable income which can be used to take



Medical and credit card bills as well as personal loans and most other consumer debts


Either 25 percent or the amount that your weekly earnings is greater than 30 times federal minimum wages (currently $7.25 for an hour), whichever is less. Here's how that breaks down:
* If your weekly disposable income is greater than $290, a maximum 25 percent is allowed.
* If the sum is between $289.99 and $217.51 The amount that is greater than $217.51 is able to be used.
* If the amount is $217.50 or lower, garnishment is not allowed.


Child support and alimony


Up to 50% if helping a spouse or child and, if not, 60%. In the event that you're more than twelve weeks behind in making payments Additional 5percent could be claimed.


Federal student loans


Up to 15%.


Taxes


The Internal Revenue Service will determine the amount taken based on standard deductions and how many dependents are you having.








Nerdy Tip
State laws around garnishment vary greatly. Your state may have additional protections that shelter more of your income or the balance in your bank account or offer exemptions for certain situations, such as being head of the household and having dependent children. Most of the time, creditors must learn about exemptions and request them independently. Nonwage garnishment is not as common, is less regulated and has less restrictions for creditors.


What can you do to stop wage garnishment
You are entitled to certain rights during the process of wage garnishment, but in most states, it's your responsibility to be aware of and exercise these rights.
You must be legally notified of the garnishment.
You can file a dispute if the notice has inaccurate information or you believe you aren't owed the debt.
Certain types of income, like Social Security and veterans benefits, are exempt from garnishment because they are income. However, they may be susceptible to being confiscated .
It is not possible to be fired for one wage garnishment, but you'll lose this protection in the event that you take more than one garnishment.

If you believe that the decision was made in error or has caused undue harm to your finances you may .
What do you do when you receive a garnishment judgement
Before you do that, take a close look at the judgment to ensure that all the details are correct. Be sure it's not something you've already paid for and is actually your obligation. If so, you should think about how much money will be taken and what it can mean for your financial situation.
Then weigh what to do next. If you've not done it before, you may want to consult an attorney for consumer law to find out what's right for you. There are three choices:
Work out a different deal
Get in touch with creditors. "A lot of consumers underestimate how important it is to have a conversation," says Tara Alderete director of enterprise education at the nonprofit financial counseling firm Money Management International. "Look at your budget, determine how much you owe, what you can pay and then call the creditor to find out how you can come up with an arrangement for payment. Creditors and consumers always have this option."
Contest the ruling
If you think the garnishment was done by mistake, caused unjustified harm, or is improperly executed, you can protest in court. You'll have to act quickly. You may have as few as five days to contest the ruling.
Accept the garnishment
You can pay off the garnishment in installments as the judgment states or pay it in one lump sum. A loan from a relative or taking out a loan to pay off the judgment, which is possible despite the garnishment of your credit report, can help you get rid of the stress of a prolonged series of payments.
It can be embarrassing to have your employer know you've been sued for debt however, it's better to be honest with your supervisor or HR department.
"Wage garnishment could cause stress in the work environment, so be proactive in speaking with your employer about the issue," Alderete says. "Have a conversation where you say what's happening and that you don't want to cause problems."
If wage garnishment creates a financial burden
If you're not sure of an alternative to wage garnishment, you can seek the free assistance of a lawyer to discuss your options, including the repayment plan or bankruptcy.
A judgment of garnishment can remain on your credit reports for up to seven years, affecting your credit score. There are however a few easy ways to bolster your credit score both during and after wage garnishment.
and adhering to it can help you stay on top of your finances and avoid another garnishment. Once you've established a budget, you'll be able to use products like a secured credit card to use .



The author's bio: Sean Pyles is the executive producer and host of NerdWallet's Smart Money podcast. His writing has been featured on The New York Times, USA Today and elsewhere.







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