If you are a resident of North Carolina and you fail to make payments on a debt as agreed, your creditor will typically initiate collection activity such as phone calls, letters and referral to a third-party collection agency. However, if you make no effort to bring your account current, your creditor may sue you in a North Carolina civil court. A civil debt judgment can pose several consequences, which may include wage garnishment under limited circumstances.
Private Creditors
Most private creditors cannot pursue wage garnishment in North Carolina. If a creditor wins a judgment against you for credit card debt, a line of credit or a secured debt such as a car or merchandise loan, your wages are exempt from garnishment. Also, if a mortgage lender obtains a judgment for a mortgage deficiency after selling your home in foreclosure, it cannot garnish your wages.
Garnishable Debts
Creditors to which you owe certain types of debts may order your employer to withhold a portion of your wages to satisfy a debt. Garnishable debts include unpaid alimony, child support, student loans and federal and state taxes. Also, certain counties in North Carolina permit garnishment for payment of emergency ambulance services.
Other States
A creditor that has obtained a civil judgment for a debt in another state may execute a wage garnishment order in North Carolina. For example, if a creditor sues you for a debt while you reside in Ohio and obtains a judgment from an Ohio court, the creditor may garnish your wages if you move and obtain employment in North Carolina. A North Carolina employer's fulfillment of a garnishment order pursuant to a judgment obtained in another state does not violate North Carolina law.
Limitations
If a debt is garnishable in North Carolina, the creditor is subject to garnishment limitations imposed by federal and state law. A private creditor with a valid judgment from another state may only garnish up to 25 percent of your income after taxes have been deducted. However, if you earn less than 30 times the federal minimum hourly wage per week, your income is protected from garnishment. If garnishment is for debts such as child support or taxes, the creditor may garnish 50 percent or more of your wages.
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