Wage garnishment serves as a voluntary payment alternative for creditors who must recover unpaid debts. Both original creditors and third-party creditors, such as debt collection agencies, have the right to pursue the debt you owe via a court-ordered wage garnishment. Once your employer receives notice of the garnishment, it re-directs a portion of each paycheck to your creditor until you pay off the debt.
Following a Judgment
A debt collection agency does not have the option to merely request that the court issue it a wage garnishment order. To earn the right to seize your wages, the company must sue you. After winning the lawsuit, it presents its court judgment to the court clerk as proof that you owe the debt in question. The court clerk then issues a writ of garnishment that the company serves upon your employer.
Legality of Garnishment
Federal wage garnishment laws protect consumers from losing the bulk of their income to a creditor's garnishment order. Title III of the Consumer Credit Protection Act, however, grants each state the right to further restrict creditors seeking payment through wage garnishment. Some states, such as Texas and South Carolina, prohibit the practice altogether. A debt collection agency can only garnish your wages if your state laws grant it the right to do so.
Previous Garnishments
Federal law requires that garnishing creditors seize the lesser or either 25 percent of your disposal income or any amount you earn that exceeds 30 times the minimum wage. If you have a previous garnishment order against you, that garnishment likely seizes the maximum amount allowed by law. Thus, a debt collection agency can only seize the debt via wage garnishment if unhindered by previous garnishments.
Community Property Law
Community property states differ from other states in that their laws consider married parties to jointly own all assets. In some community property states, such as California, this provision applies to debt as well.
If you live in a community property state and your spouse incurs a debt after your marriage that ends up with a debt collection agency, the company has the right to garnish your wages for your spouse's unpaid debt -- even if you had no knowledge of the debt's existence.
Traditional Income
A debt collection agency can garnish your wages from any employer, provided your income is traditional employment income -- pay for work you performed. Unless the debt collection agency is collecting a debt on behalf of the federal government, however, it cannot garnish non-employment income, such as child support you receive, retirement benefits, unemployment or Social Security benefits.
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