If you do not pay your debts on time and you make no effort to resolve your delinquency, your creditors may file suit against you in your county's magistrate or municipal court to obtain judgment for the debt. A civil judgment makes you legally liable for the debt, and allows the creditor to take aggressive action, which may include wage garnishment, to recover amounts you owe. If you are a senior citizen, the judgment creditor's ability to garnish your wages depends on several factors.
Amount of Earnings
Federal law limits the amount of earnings from your job that a creditor can garnish after obtaining a judgment against you. If you work at a job that pays less than 30 times the federal minimum hourly wage each week, your earnings are exempt from garnishment. If you earn more than this amount each week, a private creditor can take the lesser of 25 percent of your wage earnings or the difference between your weekly earnings and 30 times the federal minimum hourly wage each week. However, if the garnishment is for taxes, child support or bankruptcy payments, the creditor can take up to 60 percent of your earnings.
Additional Wage Garnishment Limitations
State laws may impose additional restrictions on amounts that a judgment creditor may garnish. In Florida, if you are the head of household, your wages are exempt from garnishment. North Carolina prohibits wage garnishment except for recovery of child support, taxes or amounts owed to a public hospital for medical services. South Carolina, Texas and Pennsylvania also prohibit wage garnishment in most cases.
Retirement Income
If you depend on retirement income rather than working wages, state laws affect your creditor's ability to garnish this type of income. Laws on retirement income garnishment vary widely by state. For example, Ohio law does not permit creditors to garnish Social Security retirement income. In Michigan, creditors cannot garnish income from pensions, IRAs or retirement benefits from military service or state and federal civil service.
Considerations
Because there is little you can do to stop a garnishment after a creditor has obtained a judgment, the most effective way to avoid garnishment is to work with your creditor before it files a lawsuit against you for your debt. Contact your creditor and ask about setting up a payment plan. Filing a lawsuit and executing a garnishment is expensive, so creditors will commonly agree to payment arrangements to avoid these expenses.
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