One of the methods available to a creditor in pursuing an unpaid debt is to file a civil lawsuit against the debtor. If a creditor wins a judgment against you, that creditor can potentially take action against you to garnish your wages. This means that a percentage of each paycheck is paid directly to your creditor to satisfy the debt. At time of publication, only four states do not allow garnishment of wages resulting from a creditor judgment.
Texas
Under Title 3, Section 63.004 of the Texas Civil Practice and Remedies Code, current wages are 100 percent exempt from garnishment resulting from a creditor judgment. State law permits wage garnishment for any child support owed. Under federal law, your wages may be garnished if you owe federal student loans, alimony or federal taxes. Income that is not considered a wage is also subject to garnishment, with the exception of Social Security benefits. For example, if you receive regular income from an investment, such as a rental property, a creditor can legally pursue these funds for garnishment.
Pennsylvania
Under Pennsylvania law, credit card companies and collection agencies are prohibited from pursuing wage garnishment to satisfy a judgment. State law does permit wage garnishment to recoup certain other types of unpaid debt. At time of publication, your wages can be garnished in Pennsylvania for unpaid child support, alimony or other obligations relating to a divorce decree; state-issued student loans; back rent owed on a residential lease; restitution owed resulting from a criminal conviction; and certain types of taxes. Garnishment for federal student loans or federal taxes is also permitted.
North Carolina
North Carolina does not permit garnishment of wages with the exception of three specific circumstances. Under state law, your wages may be garnished to enforce an order for child support, to recover unpaid taxes or to enforce a judgment for unpaid medical services provided by a public hospital. The North Carolina Wage and Hour Act does permit the enforcement of wage garnishment orders issued in other states if those orders are compliant with that state's garnishment law.
South Carolina
Under Section 37-5-104 of the South Carolina Consumer Protection Code, wage garnishment is not allowed to satisfy judgments for debts arising from a consumer credit sale, a consumer lease, a consumer loan or a consumer rental-purchase agreement. Wage garnishment is still available to satisfy obligations for state or federal taxes, federal student loans, child support or spousal support.
Considerations
If a wage garnishment is enforced against you under federal law, the weekly garnishment amount is limited to 25 percent of your net earnings. If a creditor is able to obtain a judgment against you in one of these four states, it may choose to pursue a bank account garnishment or place a lien on your property to force repayment of the debt.
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