A garnishment is a legal process that creditors use to collect an unpaid debt. Creditors will often make other attempts to collect on the debt before filing for a wage garnishment. State and federal agencies such as the IRS, Department of Education or Department of Motor Vehicles can also garnish wages for unpaid debts.
Creditor Wage Garnishment
To garnish your wages, a creditor must sue you in a court in your state. If a judge approves the garnishment order, the creditor will send a garnishment package to your employer to complete and return. Once you satisfy the garnishment by paying off the debt, the creditor sends a notice to your employer to terminate the garnishment. If you do not pay off the debt before the garnishment order expires, the creditor can choose to file a new garnishment request. The expiration date for garnishment orders vary by state.
Creditor Garnishment Limits
Creditors can garnish up to 25 percent of your disposable income per pay period. Disposable income is your income after state and federal tax deductions. The amount of your income that is 30 times the federal minimum wage is automatically exempt from garnishment. To make this calculation, multiply the current federal minimum wage by 30. Garnishments for state and federal agencies take priority over creditor garnishments.
Federal and State Garnishments
If you owe a state or local agency for debts such as back taxes, defaulted federal student loans, child support or spousal support, the state or federal agency can garnish your wages. State and federal agencies do not have to take you to court before a garnishment can begin. These agencies only have to send you a notice of the garnishment. Garnishments for defaulted federal student loans and federal back taxes do not expire and the orders stay in effect until you pay off the entire balance. State agency wage garnishments differ by state.
Federal and State Garnishment Limits
The garnishment limits for defaulted federal student loans is 10 to 15 percent of your disposable income. If you are behind on your child support order payments for children from a previous relationship or have spousal support order and you currently support a family, the wage garnishment maximum is 50 percent of your disposable income. If you do not currently support a family and are behind on spousal or child support payments, the wage garnishment maximum is 60 percent of your disposable income.
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