Can Creditors Garnish My Wages?

Whether a creditor, such as those collecting for unpaid credit cards and mortgage or bank loans, can garnish your wages is up to state law. If wage garnishment is not an option, a creditor can seek other collection measures, such as freezing your bank account. If garnishment is permissible, a creditor usually does not resort to it unless you refuse you pay the debt.

Obtaining a Judgment

A creditor generally does not seek to garnish your wages right as your account goes into default status. In an effort to get you to pay the debt, it typically sends you notices via mail and may call you via phone. If the creditor cannot collect from you, it can sell the debt to a debt collection agency. If you still refuse to pay or make arrangements to pay, the creditor or debt collection agency can file a lawsuit against you. The court sends you a notice of the lawsuit and includes instructions on how you can respond to it. If the creditor wins the suit, the judge grants it a judgment.

Garnishment Process

A creditor cannot garnish wages without obtaining a court-ordered judgment first. If the state allows wage garnishment, the creditor must apply for a writ of garnishment to execute the judgment via wage garnishment. Obtaining a writ is not difficult if the creditor has already obtained a judgment against you and knows your place of employment. The court and/or the creditor send the garnishment order to your employer, who is responsible for withholding the required amount from your wages.

If a creditor in certain states (such as Texas) cannot enforce a judgment via wage garnishment because the state doesn't allow it, and you are paid in a state that allows garnishment, the creditor can domesticate the judgment in the foreign state and apply for a wage garnishment there. Check your state law for its statute of limitations regarding judgments and wage garnishments.

Limits

Your employer is not supposed to withhold more than the legal amount required under federal or state law to satisfy a wage garnishment. Federal law requires the lesser of 25 percent of your disposable income or the total by which your disposable earnings is more than 30 times the federal minimum hourly wage. State law may require a smaller amount, such as Missouri's 10 percent requirement if you are the head of your household. Your employer abides by the law that gives you the most benefits.

Solutions

Though a few states do not allow creditors to garnish wages, most do. You can avoid a wage garnishment by contacting the creditor before -- or right after -- it files the lawsuit and negotiate a payment plan. If you have objections to the lawsuit, file your response according to the instructions shown on the suit notification the court sends you. If the garnishment is causing you financial hardship, contact the issuing court and find out its procedures on filing a claim of exemption. The judge can issue another writ that requires an affordable amount based on your income and expenses.