Members often post to this forum with wage garnishment questions, and many people seem unnecessarily fearful of garnishment, or at least are misinformed about how garnishment works...so, here is a brief overview of wage garnishment.
For purposes of context, this description is applicable to unsecured creditors, i.e. credit cards, etc.
What is Wage Garnishment?
Wage garnishment is a collection method whereby a creditor, with a judgment against you, is able to "directly" take a portion of your pay check to satisfy the debt you owe. Thus, your employer deducts the amount of the garnishment from your paycheck and sends that amount directly to the creditor.
Am I subject to wage garnishment?
Nearly all states have some sort of garnishment statute; the three notable exceptions are South Carolina, Pennsylvania and Texas (and maybe a few others); those states do not allow wage garnishment (except for Child Support and Tax issues). What will vary from state to state is the percentage of your pay a creditor can garnish (the average being 25%), the duration of the garnishment, and the mechanism by which garnishment occurs.
And obviously, you must be employed for wage garnishment to apply.
How does a creditor go about getting a wage garnishment?
For whatever reason, this issue seems to be the least understood by debtors, but the answer is simple.
A creditor "MUST SUE YOU" in court and receive a judgment in their favor BEFORE they can garnish your wages. Creditors have to go to court before they can garnish wages; as part of the rules of civil procedure, the creditor must comply with certain notice requirements etc. The ins-and-outs of judgments is beyond the scope of this article, but the bottom line is, the creditor must have a judgment against you, and odds are, you will know if you are getting sued. So, generally speaking, wage garnishments are rarely a "surprise."
Once a creditor has a judgment, the creditor usually must seek a writ of garnishment from the court (which is simply a matter of completing paperwork). Once the creditor has the writ of garnishment, they employ the local sheriff or private process server to go down to your place of employment and serve the writ of garnishment...note, in many states, the writ can be served by mail. You will usually get a copy of the Writ, sometimes it is mailed to you by the creditor other times you will get a copy from your HR representative at work.
Your employer is required to comply and in most states, if the employer does not comply, then the company can become liable for the money owed. From an employers perspective, wage garnishment is a fairly straightforward process (unless you work for a tiny company).
Special Garnishments
The notable exception to the "must sue you first" rule is tax related garnishments. The IRS, state taxing authorities, and certain federal administrative agencies can directly garnish your wages without suing you in state court. However, each agency has certain administrative and notice procedures they must comply with before they can garnish your wages.
Can other income other than employment income be garnished?
Generally, the answer is no; only employment income can be garnished under a state's wage garnishment law, but laws do vary. Keep in mind, we are only talking about "wage garnishment" in this thread, creditors have other collection alternatives to wage garnishment, creditors can go after assets (both hard assets and financial assets) etc. Wage garnishment laws tend to be specific to Employment Income.
Moreover, many types of non-employment income are exempt, i.e. Social Security Benefits, Child Support, etc. A private creditor cannot directly garnish those checks (note, special class creditors, e.g. IRS, VA, can directly garnish those types of benefit checks).
What if I live in one state, but work in another; or what if I no longer live and work in the state where the judgment was issued?
If you no longer work in the state from which the judgment was issued, the creditor is not without recourse. For example, if a creditor has a judgment against the debtor in CA, but the debtor now lives and works in NV, the creditor has to get the judgment recognized in NV; that process is known as domesticating the judgment. Domesticating a judgment is an easy process; the creditor needs to only complete some paperwork, allow some time for objections, and pay a fee. Granted, a creditor doesn't want to have to do this, so if you no longer reside or work in the state where the judgment was issued, the odds of your wages being garnished decrease, but a motivated creditor can still garnish your wages. (assuming you didn't move to South Carolina or Texas
)
Can I be fired for wage garnishment
Title III of the Consumer Credit Protection Act forbids employers from firing an individual because of wage garnishment, and frankly, most employers don't care that your wages are being garnished. But as with any employment related issue, nothing can really stop an employer from "manufacturing" a reason to fire you, and unless you are subject to the terms of an employment contract, you are as at-will employee, meaning your employer can fire you anytime they want with or without cause. Thus, then the burden is on you to enforce your rights and prove that you fired in violation of the law.
Does Bankruptcy Stop Wage Garnishment
Yes. When you file Bankruptcy, that act creates the "automatic stay" which forbids all creditors from doing anything to collect a debt. However, unless you take steps to notify your employer and the garnishing creditor of your BK, there will be a delay between the time you file BK and the time the garnishment actually stops. Thus, if you need the garnishment to stop ASAP, you need to take your file stamped petition directly to the garnishing creditor and your employer.
If a check is garnished after BK, you can get that money back and most creditors will simply issue a refund once they see the BK paperwork
Bottom line, wage garnishment is something that happens near the end of the collection cycle. Reason being, creditors would rather not go to the trouble to go to court; generally creditors do not consider lawsuits until about 6-18 months after your first default.
For purposes of context, this description is applicable to unsecured creditors, i.e. credit cards, etc.
What is Wage Garnishment?
Wage garnishment is a collection method whereby a creditor, with a judgment against you, is able to "directly" take a portion of your pay check to satisfy the debt you owe. Thus, your employer deducts the amount of the garnishment from your paycheck and sends that amount directly to the creditor.
Am I subject to wage garnishment?
Nearly all states have some sort of garnishment statute; the three notable exceptions are South Carolina, Pennsylvania and Texas (and maybe a few others); those states do not allow wage garnishment (except for Child Support and Tax issues). What will vary from state to state is the percentage of your pay a creditor can garnish (the average being 25%), the duration of the garnishment, and the mechanism by which garnishment occurs.
And obviously, you must be employed for wage garnishment to apply.
How does a creditor go about getting a wage garnishment?
For whatever reason, this issue seems to be the least understood by debtors, but the answer is simple.
A creditor "MUST SUE YOU" in court and receive a judgment in their favor BEFORE they can garnish your wages. Creditors have to go to court before they can garnish wages; as part of the rules of civil procedure, the creditor must comply with certain notice requirements etc. The ins-and-outs of judgments is beyond the scope of this article, but the bottom line is, the creditor must have a judgment against you, and odds are, you will know if you are getting sued. So, generally speaking, wage garnishments are rarely a "surprise."
Once a creditor has a judgment, the creditor usually must seek a writ of garnishment from the court (which is simply a matter of completing paperwork). Once the creditor has the writ of garnishment, they employ the local sheriff or private process server to go down to your place of employment and serve the writ of garnishment...note, in many states, the writ can be served by mail. You will usually get a copy of the Writ, sometimes it is mailed to you by the creditor other times you will get a copy from your HR representative at work.
Your employer is required to comply and in most states, if the employer does not comply, then the company can become liable for the money owed. From an employers perspective, wage garnishment is a fairly straightforward process (unless you work for a tiny company).
Special Garnishments
The notable exception to the "must sue you first" rule is tax related garnishments. The IRS, state taxing authorities, and certain federal administrative agencies can directly garnish your wages without suing you in state court. However, each agency has certain administrative and notice procedures they must comply with before they can garnish your wages.
Can other income other than employment income be garnished?
Generally, the answer is no; only employment income can be garnished under a state's wage garnishment law, but laws do vary. Keep in mind, we are only talking about "wage garnishment" in this thread, creditors have other collection alternatives to wage garnishment, creditors can go after assets (both hard assets and financial assets) etc. Wage garnishment laws tend to be specific to Employment Income.
Moreover, many types of non-employment income are exempt, i.e. Social Security Benefits, Child Support, etc. A private creditor cannot directly garnish those checks (note, special class creditors, e.g. IRS, VA, can directly garnish those types of benefit checks).
What if I live in one state, but work in another; or what if I no longer live and work in the state where the judgment was issued?
If you no longer work in the state from which the judgment was issued, the creditor is not without recourse. For example, if a creditor has a judgment against the debtor in CA, but the debtor now lives and works in NV, the creditor has to get the judgment recognized in NV; that process is known as domesticating the judgment. Domesticating a judgment is an easy process; the creditor needs to only complete some paperwork, allow some time for objections, and pay a fee. Granted, a creditor doesn't want to have to do this, so if you no longer reside or work in the state where the judgment was issued, the odds of your wages being garnished decrease, but a motivated creditor can still garnish your wages. (assuming you didn't move to South Carolina or Texas
)Can I be fired for wage garnishment
Title III of the Consumer Credit Protection Act forbids employers from firing an individual because of wage garnishment, and frankly, most employers don't care that your wages are being garnished. But as with any employment related issue, nothing can really stop an employer from "manufacturing" a reason to fire you, and unless you are subject to the terms of an employment contract, you are as at-will employee, meaning your employer can fire you anytime they want with or without cause. Thus, then the burden is on you to enforce your rights and prove that you fired in violation of the law.
Does Bankruptcy Stop Wage Garnishment
Yes. When you file Bankruptcy, that act creates the "automatic stay" which forbids all creditors from doing anything to collect a debt. However, unless you take steps to notify your employer and the garnishing creditor of your BK, there will be a delay between the time you file BK and the time the garnishment actually stops. Thus, if you need the garnishment to stop ASAP, you need to take your file stamped petition directly to the garnishing creditor and your employer.
If a check is garnished after BK, you can get that money back and most creditors will simply issue a refund once they see the BK paperwork
Bottom line, wage garnishment is something that happens near the end of the collection cycle. Reason being, creditors would rather not go to the trouble to go to court; generally creditors do not consider lawsuits until about 6-18 months after your first default.
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