Definition of Disposable Wage for Garnishments in Maryland

Maryland wage garnishment is a debt collection process that occurs when a debtor fails to pay a debt. Wage garnishment allows creditors to obtain payment for past due services, lines of credit and bills. After obtaining a judgment against the debtor, the creditor may request an employer deduct a portion of a debtor's paycheck each pay period to reconcile a debt. The amount a creditor can garnish depends on the amount of the debtor's disposable income.

Exempt Items

Disposable wages are the money that remains after an employer deducts certain items from a debtor's paycheck. These deductions occur during the payroll process before direct deposit or payment of wages by check. Applicable deductions include federal and state taxes, Social Security and medical or unemployment insurance. The amounts of these deductions are exempt when determining the amount of the garnishment each pay period.

Non-exempt Items

Any non-employment expenses, such as mortgages, vehicle payments or out-of-pocket doctors' expenses do not count when determining disposable income. For example, a debtor may have a mortgage obligation each month that he pays with his wages. The amount of the mortgage is not an applicable deduction and the payment is non-exempt from wage garnishment. A debtor must use his remaining wages to continue paying the mortgage, even if it lessens the amount of money he receives each pay period.

Limitations

As of publication, a creditor may only garnish 25 percent of a debtor's disposable income in Maryland. For example, a worker receives wages of $1,000 after deductions for Social Security, taxes and insurance. The entire $1,000 is subject to wage garnishment because it is disposable wages. Since Maryland only allows a garnishment deduction of 25 percent of these wages, a debtor would have his wages reduced by $250 each pay period until reconciliation of the debt. In providing the 25-percent limitation to the garnishment, a debtor may not have his entire paycheck garnished at one time.

Exceptions

The definition of disposable wages changes if a debtor makes minimum wage. For this circumstance, Maryland wage garnishment laws consider disposable income 30 times the hourly amount the debtor receives. As of publication, the federal minimum wage is $7.25 per hour. Anything over 30 times this amount is not disposable wages and is not considered when deducting the 25 percent for wage garnishment.