Many states that allow wage garnishments set their own maximum threshold, which dictates the amount an employer can withhold from an employee's pay each week to satisfy a wage garnishment. The state of Colorado generally adheres to Title III of the Consumer Credit Protection Act, which sets the federal wage garnishment limits.
Garnishment Procedure
Creditors in Colorado who want to recover unpaid debts from clients can use wage garnishment. Unlike a tax authority, such as the Internal Revenue Service, which does not a court order to garnish, a creditor in Colorado must go through the necessary court procedures to garnish wages. The creditor must first sue the debtor, but to obtain a judgment, it has to win the suit. If it does, it can obtain an order to garnish the debtor's wages through the said court. Nonsalary and nonwage income -- such as pensions, most public benefits and assistance, and some insurance benefits -- is exempt from wage garnishment in Colorado.
Withholding Threshold
For most wage garnishment withholding, Colorado follows federal law, which requires an employer to withhold no more than the smaller of 25 percent of an employee's disposable wages for the week or the amount by which the disposable earnings exceed 30 times the federal minimum hourly wage. As of 2011, a judgment in Colorado accrues interest at the rate of 8 percent per year, or more if a contract states otherwise, until satisfied.
Child Support
An employer can withhold up to 50 percent of an employee's disposable wages for child support if the employee is supporting a child not included in the support order, and up to 60 percent if she is not. An additional 5 percent withholding for support payments exceeding 12 weeks is allowed. In Colorado, child support withholding takes priority over all other wage garnishments except an IRS tax levy that the employer received before the support order.
Statute of Limitations
In Colorado, a creditor has three years from when the debt went into default to seek judgment for open accounts, such as credit cards, six years for written contracts or promissory notes and three years for written contracts for goods and services.
Considerations
It can be difficult, but not impossible, to stop a wage garnishment once it has started. For example, a debtor can challenge the garnishment if she was not properly served. If the garnishment is causing her financial hardship, she can contact the issuing court. The court will consider her circumstances. If it agrees with her hardship claim, it can issue another garnishment for a lesser amount.
In Colorado, the wages of an individual who obtains public assistance through fraudulent methods can be garnished. In this case, an employer can garnish up to the lesser of 35 percent of the employee's disposable income for the week or the total by which the disposable income exceed 30 times the federal minimum hourly wage.
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