Wage garnishment is the taking of a percentage of your wages by your employer to be forwarded to a creditor to whom you owe a debt. Once your wages are garnished, a second creditor can take money as long as the total amount deduced from your pay does not violate federal or state laws.
Function
The purpose of a wage garnishment is to repay a debt you owe in full to a creditor over time. The money is taken directly out of your paycheck to ensure the cash gets to a creditor who has a valid debt. Your employer must comply with the garnishment and federal and state laws once he receives legal notice.
Types
Various creditors and agencies can garnish wages, including private, state and federal entities. Private creditors, such as a credit card company, must get a money judgment against you in court and a wage garnishment order. Both orders are sent to your employer, who takes the money out of your check and forwards the cash to the correct party.
Federal and state creditors do not have to go to court to garnish wages. The Internal Revenue Service sends its own garnishment notices to employers for tax debt, while the procedures for state creditors vary.
Considerations
A second creditor cannot garnish your wages if doing so would result in more than 25 percent of your earnings after taxes, under federal law. State laws differ, and the creditor must follow state law if the law dictates a smaller garnishment percentage.
Some creditors, such as the IRS, have preference over private creditors. An order from the IRS would take precedent over a private creditor already receiving some of your wages, and the payments to the private creditor are halted until the IRS is paid.
Misconceptions
Federal law forbids firing a worker because she has a wage garnishment from a creditor. However, the law does not grant protection against a second garnishment, per the U.S. Department of Labor. Some states, like Texas, do not allow private creditors to use wage garnishment.
Not all states have an exemption for a worker experiencing financial hardship to temporarily stop the collection of the debt through his income. Some states have a minimum amount of income you must earn before wages are garnished, such as $217.50 weekly in New York.
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