Wage garnishment occurs when a court order has been filed that requires your employer to hold a portion of your earnings. The earnings are used to pay toward a debt owed, such as child support or unpaid student loans. If you pay insurance monies, portions of the money may be protected from garnishment.
Features
If a judgment is made against you, a judge may release a Writ of Garnishment to your employer. The employer is then required to report how much money you make and your current deductions, including payments to taxes, insurance policies and retirement funds. An amount based on these figures will be calculated to determine how much the employer must withhold from your paycheck.
Amounts
According to the United States Department of Labor, 25 percent of disposable income is permitted to be garnished. If you earn close to minimum wage, you must be left with at least 30 times the current federal minimum wage. Disposable income is the amount of earnings that occur after required deductions are made, like taxes, Social Security and unemployment insurance.
Types
Certain insurance payments that are not required for law are open to garnishment. According to the United States Department of Labor, health and life insurance is not required by law and therefore can be open to wage garnishment. Any contributions you make toward these forms of insurance will be used to calculate your disposable income.
Considerations
If you are paying out large sums of money for insurance and can't afford basic expenses after the wage garnishment, you can file a Claim of Exemption through the courts. You'll be given a chance to explain before a judge your current financial situation, and he can decide whether or not to set aside the Writ of Garnishment. Also, once the judgment is paid off, you'll no longer be subject to wage garnishment.
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