Wage garnishment is a process used by a creditor to collect on a debt. Once a court judgment is obtained, the creditor can go to court to obtain a wage assignment, or garnishment. A wage assignment summons is sent to your employer, who must complete the information and withhold the maximum amount of money allowed by law. This money is held until your next court appearance during which you can respond to the garnishment.
Federal Law
Wage garnishment regulations are contained in Title III of the Consumer Credit Protection Act and are administered by the Wage and Hour Division of the Department of Labor. The Act sets forth the maximum amount of wages that can be garnished for debt, judgments, tax levies and child support. It also provides protection for workers by prohibiting employers from terminating a worker specifically because their wages are garnished. The law protects anyone earning a wage and also includes garnishment protection for pensions and retirement programs.
Regulations
For a judgment, the law sets the amount that can be garnished at 25 percent of the earnings received that exceed 30 times the federal minimum wage in a weekly pay period. Earnings include wages, commission, salary, bonuses and other income, but exclude tips from garnishment. The garnishment amount is figured on your disposable income, which is your gross wages less legally required deductions such as federal and state taxes, required pension contributions, Social Security and unemployment insurance. Once your disposable income is determined, 30 times the minimum wage is deducted and the result is the earnings that can be garnished.
Restrictions
Title III is designed to ensure that you receive compensation for working despite a wage garnishment from a judgment. The minimum amount per week that you are entitled to earn is $217.50. If 25 percent of your disposable earnings would reduce your earnings to below the minimum entitlement, the full 25 percent cannot be taken. For example, if you earned $290 in a week, only the amount above $217.50 could be garnished. If your state's minimum wage is higher than the federal government's, the state wage is used for the calculation. If your state restricts garnishments to less than 25 percent, state law supersedes. Four states do not allow wage garnishments at all.
Other Garnishments and Levies
If you owe child support, up to 50 percent of your wages can be garnished if you support another household, and 60 percent can be taken if you do not support another household. If you are currently garnished for child support and a normal garnishment comes through, the 25 percent rule kicks in for the normal garnishment. If 25 percent of your disposable earnings are already taken, the normal garnishment fails. However, if you have a federal or state tax lien to contend with, or certain bankruptcy orders, the 25 percent rule does not apply.
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