Q: I have several outstanding debts and I’m worried about wage garnishment. What do I need to know? A: Wage garnishment is the process in which funds are deducted from a person’s salary to pay for their outstanding debts.
Read on to have all your questions about wage garnishment answered. How does it work? Unless you owe on child support, back taxes or student loans, creditors of consumer debt will require a court order to garnish your wages. They’ll need to sue you, win the case against you and get a court order to garnish your wages. After obtaining a court order, the creditor must send you written notification of the wage garnishment that includes the exact amount of money you owe, as well as information regarding your options going forward.
The creditor will then forward a copy of the court order to your employer, who will withhold the garnished amount from your next paycheck. How much of my wages can be garnished? According to federal law, creditors of consumer debt can garnish 25% of your take-home pay. Other kinds of debt can have higher maximums for wage garnishment, as detailed below. What are the most common types of wage garnishment?
1. Child support and alimony
All new or modified child support orders include an automatic wage withholding order. After the court has ordered you to pay child support, the court or the child’s other parent must send a copy of the order to your employer. The employer is then responsible for garnishing the specified amount from your paycheck and sending it to the child’s other parent. The amount of money garnished from your earnings for child support can be as high as 65%.
2. Defaulted student loans
If you default on your student loan, the U.S. Department of Education, or an agency collecting money on their behalf, can garnish up to 15% of your income.
3. Back taxes
If you owe back taxes, the IRS can garnish a chunk of your income. The amount it can garnish varies with circumstance. To garnish your wages, the IRS is required to send a wage levy notice to your employer, who must provide you with a copy. The notice you receive will include an exemption claim form for you to complete and return.
Can I protest a wage garnishment?
To protest wage garnishment, you’ll need to file papers with the court for a hearing date. At your scheduled hearing, you must present evidence demonstrating that you need more of your paycheck to cover your expenses or that you qualify for an exemption. The judge will either terminate the garnishment or leave it in effect.