If you have unpaid credit card debt, the credit card company can garnish your wages. The credit card company has to sue you in court and a judge has to find in their favor before the garnishment can begin. Regular wage garnishments are subject to federal laws under Title III of the Credit Consumer Protection Act. In addition to wage garnishment, credit card companies can also garnish your state income tax refund to collect on your unpaid debt.
Wage Garnishment Lawsuit
A credit card company sues you by filing a Request and Writ for Garnishment at your local county courthouse. Your local sheriff or court process server serves you with the lawsuit papers that will include the details of your debt, the total amount you owe and a court date. Your court papers also give you a certain amount of time to respond to the suit. Response times vary by state, but can range from between 10 and 21 days.
Garnishment Percentages
Wages you earn that are greater than 30 times the federal minimum wage are subject to garnishment. The amount you earn that is equal to or below 30 times the federal minimum wage is exempt from garnishment. Title III of the Credit Consumer Protection Act limits creditor garnishment amounts to 25 percent of your disposable income or after-tax wages. The only time you can have more than 25 percent of your disposable income garnished is if you owe back taxes or are behind in child support or spousal support payments.
Multiple Garnishments
It is possible for two different credit card companies to garnish your wages at the same time. In this case, the combined wage garnishment percentages have to be less than 25 percent of your disposable income. If the first wage garnishment order is already taking the maximum 25 percent, the second garnishment cannot begin until you pay the first garnishment off. However, if the first garnishment is taking less than 25 percent, the second garnishment can begin. For example, if you have two garnishments and the first one is taking 15 percent of your disposable income, the second garnishment can take up to 10 percent. The percentage of both garnishments combined equals the 25 percent maximum.
State Tax Refund Garnishment
When you overpay on your state income taxes during the year and expect a refund, that money is subject to garnishment. For this to happen, the credit card company must file a Writ for Garnishment (Income Tax Refund/Credit). Title II of the Credit Consumer Protection Act does not limit the amount of money that credit card companies can garnish from your state income tax refund. Credit card companies cannot garnish your federal income tax refund.
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