Each state sets its own statute of limitations for wage garnishment. A few states do not allow wage garnishment, while others allow creditors to collect debts for different periods of time depending on the type of debt the debtor owes. Wage garnishment can seriously interfere with your financial health, so you should attempt to settle the debt with your creditor rather than accepting garnishment.
Meaning
The statute of limitations is the amount of time the creditor has to use the court system to obtain a judgment against you and take action such as garnishing your wages. The statute of limitations is counted from the date you go into default on a debt, not from the date you incurred the debt. The creditor can still contact you to attempt to collect the debt after the statute of limitations expires as long as he does not attempt to take court action against you.
Fair Debt Collection Practices Act
Creditors and collections agencies cannot make empty threats in an attempt to collect a debt. Thus, a creditor cannot threaten to garnish your wages unless he has the legal recourse to do so. If the statute of limitations has run out, for example, by law the creditor cannot use the threat of wage garnishment against you. If a creditor threatens to garnish your wages when it is not legal for him to do so, file a complaint with the federal trade commission.
Maximum Wage Garnishment
Although creditors can use wage garnishment to collect a debt as long as they do not violate the statute of limitations, they cannot garnish all of your wages. Federal law prohibits creditors from collecting more than 25 percent of your wages or 30 times the federal minimum wage, whichever is greater. As of 2011, states may make their own laws regarding garnishment limits but may not allow creditors to garnish more than the federal limit.
Statute of Limitations on Judgments
Many states have a statute of limitations of between three to five years on debt collection. Thus, debt collectors only have a short window of time to sue debtors for unpaid debts. However, once the creditor obtains a judgment against you, your state may allow a far greater period of time for collecting the judgment. For example, California allows creditors to collect judgments for at least 10 years after the court date. Thus, creditors may be able to garnish your wages for a long period of time to satisfy a judgment even though the statute of limitations on the debt itself has long since expired.
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