what to do when wages are garnished

Wage Garnishment: Understanding and Addressing Legal Deductions

Definition and Legal Framework

Wage garnishment is a legal process where a creditor obtains a court order requiring an employer to withhold a portion of an employee's earnings to satisfy a debt. It is governed by federal laws, primarily the Consumer Credit Protection Act (CCPA), as well as state laws, which may offer additional protections. The CCPA limits the amount that can be garnished and protects employees from discharge due to garnishment for a single debt.

Permissible Garnishment Types

  • Child Support and Alimony: These garnishments often have higher allowable deduction rates established by state law and federal guidelines.
  • Federal Student Loans: The U.S. Department of Education can garnish wages to recover defaulted student loans without obtaining a court order. Specific regulations apply to these deductions.
  • Federal and State Taxes: Government agencies like the IRS and state revenue departments can garnish wages for unpaid taxes.
  • Consumer Debts: This category includes credit card debt, medical bills, and other personal loans. A court order is generally required before garnishment can commence.

Limits on Garnishment Amounts

The CCPA specifies that the amount that can be garnished for most debts (excluding child support, alimony, and taxes) is limited to the lesser of 25% of disposable earnings (earnings after legally required deductions like taxes) or the amount by which disposable earnings exceed 30 times the federal minimum wage. State laws may provide even greater protection.

Employee Rights and Protections

  • Right to Notice: Employees are typically entitled to receive notice of the garnishment order. This notice should specify the debt, the amount to be garnished, and the creditor's information.
  • Right to Challenge the Garnishment: Employees may have grounds to challenge the garnishment if the debt is not valid, the amount is incorrect, or the garnishment violates legal limits. This often involves filing a claim with the court.
  • Protection from Termination: Federal law prohibits employers from discharging an employee if wages are garnished for a single debt. However, this protection does not extend to multiple garnishments. State laws may offer broader protections.

Disposable Earnings Calculation

Disposable earnings are calculated by subtracting legally required deductions from gross earnings. Legally required deductions typically include federal, state, and local taxes; Social Security and Medicare contributions; and mandatory retirement contributions. Voluntary deductions, such as health insurance premiums or charitable contributions, are generally not subtracted.

Resources and Assistance

  • Legal Aid Societies: Offer free or low-cost legal assistance to individuals who qualify.
  • Consumer Credit Counseling Agencies: Provide financial counseling and debt management services.
  • U.S. Department of Labor: Offers information about wage garnishment laws and employee rights.
  • State Bar Associations: Can provide referrals to attorneys specializing in consumer law.

Challenging a Garnishment Order

If an individual believes a garnishment order is incorrect or unlawful, they may have grounds to challenge it. This typically involves filing a claim with the court that issued the order. Common reasons for challenging a garnishment include mistaken identity, incorrect debt amount, expiration of the statute of limitations, or violation of garnishment limits.