Debtors who default on their debt are sometimes subject to wage garnishment. Wage garnishment can be a scary and restrictive process, and no matter how you're involved with it, you must understand its rules. There are limits on how much of a dent garnishment can make in someone's wages, but the limits vary by state.
Wage Garnishment
Wage garnishment is a last-resort approach taken by creditors whose debtors have not taken other steps to pay back their debt. By filing a successful court order, creditors can legally oblige a debtor's employer to remove funds from the his wages to pay the debt.
Exemptions
People working minimum-wage jobs are subject to wage garnishment, but not all funds can be garnished. The employer must leave enough funds in the paycheck, for example, so the employee can pay the usual legal obligations: taxes, insurance, Social Security and the like. Deductions that are not legal obligations, however, like union dues, are not protected from wage garnishment.
Federal Restrictions
Both state and federal laws set limits on the percentage of a debtor's wages that can be confiscated through garnishment. According to Title III of the federal Consumer Credit Protection Act, garnishments are limited to the lesser of "25 percent of disposable earnings or the amount by which disposable earnings are greater than 30 times the federal minimum hourly wage." Thus, a worker making $300 a week after taxes would only have to pay 25 percent of those earnings -- $75 -- in garnishment.
State Restrictions
Depending on where you work, your garnishments may be subject to additional restrictions or specifications under state law. Whether you are garnishing or being garnished, know your state's laws on the matter. See "Resources" for an overview of all state garnishment laws.
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