Debt collection agencies, such as those collecting for medical bills and personal loans, and creditors, such as credit card companies and banks, typically send you notices via mail when attempting to collect a debt you owe. If you ignore the notices, they may resort to more stringent tactics, such as a wage garnishment.
Determination
Each state has its own regulations regarding which properties debt collectors and creditors can seize and which properties are protected from garnishment. Consequently, debt collectors and creditors can garnish your wages if state law allows it. Most states set limits on the amount of wages that can be garnished within a single pay period. However, states such as Texas do not allow wage garnishments at all; therefore, 100 percent of a debtor's wages is exempt from ordinary wage garnishments. The exemption does not apply, however, to federal or state debts. Wage garnishments for federal student loan and child support are enforceable, even if you live in a state such as Texas. Debt collectors and creditors must obtain a court-ordered judgment to garnish wages.
Limit
Title III of the Consumer Credit Protection Act is the federal regulation that limits the amount an employer can withhold for a wage garnishment in a single pay period. Employers may withhold up to 25 percent of your disposable earnings or the total by which your disposable earnings exceed 30 times the federal minimum wage -- whichever is smaller. This limit applies to ordinary wage garnishments, such as those a debt collector or creditor initiates. Your employer subtracts legally required deductions, such as payroll taxes, from your gross wages to arrive at your disposable earnings. The state may set a different limit. In this case, your employer uses the one that gives you the greater benefit, such as whichever has the lowest deduction amount.
Prioritization
Your employer typically processes wage garnishments in the order received. However, garnishments ordered by a higher jurisdiction court, such as a tax levy or child support withholding order, take precedence over all other wage garnishments, including student loans. Your employer can withhold more than one wage garnishment simultaneously from your wages, provided that the total amount does not exceed the federal or state limit.
Considerations
Title III forbids your employer from firing you because it received one wage garnishment against you. The protection does not apply, however, if your employer receives more than one wage garnishment against you. Your state may provide additional protection against discharge. If a debt collector or creditor files a lawsuit against you, the court sends you notification of the suit. If you object to any aspects of the garnishment, check the garnishment notice for instructions on how to file your answer, or response to the lawsuit. File your answer within the time frame stated on the paperwork. If the garnishment is causing you hardship, contact the issuing court for its procedures on filing a hardship claim or claim of exemption.
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