Employees may face wage garnishment if they owe back taxes and child support, or have delinquent credit card bills and student loans. Federal and state laws protect a portion of employees' wages from garnishment to pay debts. However, workers can dispute garnishments if they're unable to live on a reduced income.
Process
The type of debt a person owes affects how the garnishment process takes place. Creditors need a court order to garnish a person's wages. A creditor must sue a debtor to collect the money owed -- and win the case -- to get a garnishment order sent to the debtor's employer. The employer informs the employee about the order and begins withholding a specified amount of money from the employee's wages to send to the creditor. Court orders aren't necessary when a person owes back taxes, child support or student loans. Consider whether you have enough income remaining to cover necessary expenses following a garnishment. If not, you can dispute the garnishment.
Disputing Garnishments
Limits are set on deductions from workers' wages to satisfy garnishment orders. For example, a creditor can't garnish more than 25 percent of your wages after tax deductions, according to the U.S. Department of Labor. However, deductions vary based on a person's wages and state laws, which sometimes set lower limits on garnishment amounts. You can request a hearing with the court that issued the order against you in an attempt to get the garnishment amount reduced or eliminated. At the hearing, be prepared to present utility bills, an apartment lease, mortgage bills or other documentation to show you need more of your wages to cover necessary expenses.
Employers
Issue a complaint with the U.S. Department of Labor's Wage and Hour Division if your employer terminates you or retaliates against you in another way because of a garnishment for one debt. Title III of the Consumer Credit Protection Act prohibits such actions by an employer. Workers who get their jobs back after filing a complaint against an employer are entitled to payment of back wages. Note that the law doesn't prevent employees from losing their jobs if they face a garnishment for more than one debt.
Considerations
Creditors and others usually pursue wage garnishment as a last resort after many previous attempts to collect a debt. Don't ignore notices of pending debt collection lawsuits or garnishment orders. You will likely have more options for working out a repayment plan before a garnishment begins than after an order is enforced. For instance, some taxpayers can work out agreements with the Internal Revenue Service to pay taxes in smaller installments until their tax debts are paid. Title III restrictions on garnishment amounts don't apply if the IRS garnishes a person's wages to recoup back taxes, so people can lose a sizable portion of their income in an IRS garnishment.
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