Garnishment of wages is a legal action that compels the employer of a debtor to pay some of the debtor's wages to a creditor. The creditor can be a private party, business or government entity. Wage garnishment is regulated by state and federal laws. These laws address the amounts that can be garnished and procedural rules.
Wage Garnishment
Wage garnishment is a legal action that creditors use to collect money from debtors that owe them money. It legally compels the employer of the debtor to pay some of the debtor's wages directly to the creditor. Garnishments are used by private, commercial and government creditors. The most common types of debts involved are for child support payments, student loans and taxes. Private and commercial creditors usually need to have a valid judgment against the debtor to use a garnishment. Government entities most often need to follow certain administrative procedures to use garnishment, without needing a judgment.
Federal Law
The federal Consumer Credit Protection Act regulates the amount of money that can be garnished from the debtor's wages. The act limits the amount that can be garnished based on the type of debt involved. Garnishments for collection of debts from private creditors is limited to 25 percent of the debtor's weekly net pay or the amount of weekly pay that exceeds 30 times the hourly minimum wage, whichever is less. For court orders regarding support payments, garnishment can be up to 60 percent of the net pay. Student loan garnishments are limited to 10 percent of net pay. Garnishment amounts regarding taxes or bankruptcy proceedings are regulated by the taxing entity or bankruptcy court.
Oregon State Law
Procedural issues regarding wage garnishment are controlled by Oregon state law in Portland, Oregon. A wage garnishment can only be applied by properly serving a legal order called a writ on the debtor's employer. A copy of this writ must be given to the debtor-employee, who has between 30 and 120 days to legally challenge the writ. The employer must start paying the allowed amount of garnishment, even if there is a filed challenge by the debtor-employee. Writs from private creditors expire in 90 days or until paid in full or cancelled. Writs from other creditors do not have an expiration date.
Other Provisions
The federal act considers net wages to be the gross amount of wages less all legally required deductions. This includes all taxes and Social Security. It does not include deductions for things like retirement contributions or medical insurance. The maximum garnishment amount as stated in the act applies to the total for all garnishments. State law allows an expired garnishment writ to be reissued if the debt is still present and valid. Both federal and state law prohibit an employer from firing an employee because of a garnishment.
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