Can a Collection Agency Threaten to Garnish Wages?

When a person falls behind in paying debts, one option that collection agencies can use is to attempt a garnishment. The garnishment order tells a third party, either a bank or an employer, to either take funds from an account or to withhold money from paychecks to turn over to the collection agency. There are restrictions on the amount of money that can legally be withheld.

Garnishment Order

In order for a collection agency to have wages garnished, a judge needs to mandate a garnishment order. If a debtor receives a notice that he is being sued, ignoring that lawsuit means that garnishment proceedings might be taking place.

Limitations

Under Title III of the Consumer Credit Protection Act, only a certain amount of a weekly paycheck can be withheld due to garnishment. Any weekly wages that are less than 30 times the federal minimum wage cannot be garnished. So, if the federal minimum wage is $7.25 an hour, garnishment only can take place when the weekly paycheck (after taxes are taken out) is over $217.50 but less than $290. When a paycheck is over $290, the maximum garnishment that can be taken is 25 percent of the check. In cases where a pay period isn't weekly, multiples of the weekly equation are factored in. So, if an employee gets paid every two weeks, the paycheck has to be over $435 before anything can be garnished. The CCPA also protects an employee from being fired because of a single instance of garnishment. But if there are more instances of garnishment, an employer does have the right to let an employee go.

Empty Threats

Debt collectors are not allowed to threaten to garnish wages unless they actually intend to file suit and bring the case to court. Simply using wage garnishment as a threat is not legal, and the collection agency that threatens an individual can be reported to the Office of the Attorney General. Naturally, if the lawsuit is going to be filed, however, a collection agency can explain that wage garnishment might occur.

Individual Garnishments

Individuals can also get garnishment orders from a judge. When actor Randy Quaid and his wife failed to pay a private investigator they had hired the money she was owed, she filed a lawsuit against the couple. The judge provided a garnishment order that actually had film residuals from Randy Quaid's movies turned over to the private investigator.