Garnishment is when a creditor excercises its claim against the assets of a debtor that are in the possession of another party, like a paycheck. It differs from attachment, which is taking assets that the debtor already has in his possession. Following a legal process, different types of debts may be garnished from a paycheck, including child support, alimony and consumer debt.
Court Action
In any state that allows garnishment of wages for the collection of consumer debt, wages are usually garnished after the creditor wins a lawsuit for the amount of the debt. After the lawsuit, the court must issue an order allowing the creditor to take a portion of an employee's wages. The creditor presents this order to the employer which must comply with the court's decision and turn over the requested portion directly to the creditor.
Amount
Federal and state law defines how much of an employee's wages, based on disposable income, that a creditor may garnish for consumer debt. The law allows creditors to garnish the lesser of 25 percent of a person's disposable income or the amount of disposable income that exceeds 30 times the federal minimum wage. As of 2011, 30 times federal minimum wage is $217.50. If a person has less disposable income than $217.50 each week, garnishment for consumer debt is not permitted. If a person earns under $290.00 per week in disposable income, any amount over $217.50 may be garnished. If a person earns more than $290.00 in disposable income, 25 percent of the disposable income may be garnished.
Other Debts
Garnishment, at a much higher rate, is also allowed for child support and alimony payments. A person could lose up to 50 percent of his disposable income to garnishment for child support if he is also supporting a current spouse and child, and 60 percent if he is not, plus an additional 5 percent if he is past due by 12 weeks on payments. State and federal taxes, as well as Chapter 13 bankruptcy repayments, may also be garnished at different rates.
State Laws
Some states have their own laws concerning garnishment of wages. They may restrict the percentage allowed for garnishment to repay consumer debt or not allow garnishment for consumer debt at all. Pennsylvania and Texas, as well as North and South Carolina do not allow wage garnishment to pay consumer debts. All states allow garnishment for alimony or child support, or tax debt and student loans.
0 comments:
Post a Comment