Garnishing Wages

Wage garnishment refers to a legal decree obtained by a creditor, for withholding certain amount from the disposable income of a debtor, who is unable to pay off his debts. The deducted amount is used to pay the amount that an individual owes his creditors. Disposable income is the amount left after subtracting income tax from one's gross income.

Garnishing wages is an effective tool that allows a creditor to claim the amount of money owed by a debtor. It is for this reason, that the Federal and State Laws have set a cap at the amount that can be withheld by the employer (of a debtor) due to the 'judgment' obtained by the creditor, under the provision of wage garnishment. According to the Federal Laws, this cap exists at 25% of the net income earned by the debtor. In case of non payment or federal taxes, wage garnishment can even be evoked by the Internal Revenue Service (IRS).

Garnishing wages can be used to pay almost any kind of debt. However, the most common debts are:

• Child Support
• Taxes
• IRS Debts
• Alimony
• Default on Student Loans
• Other financial debts

A debtor suffers from garnishing wages as long as the debts are not paid off.

Wage Garnishment Laws

Rules of wage garnishment are different for every state. However, the basic framework remains the same. According to the wage garnishment laws, when one can't pay his bills, a creditor can go to court and win a case against the defaulter. The creditor obtains a 'judgment' (court order) against such an individual, containing information like how much amount is owed to the creditor and what is the interest rate on the unpaid amount. In certain cases, a creditor may compel a debtor through legal decree, to appear at supplemental proceedings to answer questions regarding one's wages, bank accounts and other assets. Once the legal decree has been obtained for wage garnishment, the employer of a debtor holds back a portion of his salary, to provide for payment of his debts.

However, wherever the State laws are different from the Federal laws, the law that results in lower amount of garnished wage would apply. At present, four states - Pennsylvania, North Carolina, South Carolina and Texas do not allow its residents to suffer from garnished wages, other than in case of debts related to Federal or State taxes, child support, court-ordered fines, federally sponsored student loans or compensatory payments decided by the court related to criminal or civil law suit. In Florida, a person providing for more than half of child support or other dependent, cannot be subjected to wage garnishment. In case, there are multiple cases of garnishment on an individual, then Federal tax garnishment will get first priority. This is followed by local tax garnishments and finally by credit card garnishments.

Dealing with Wage Garnishment

Besides all the protection by the Federal and State laws, there are other wage garnishment rights that allow an individual to lessen the blow dealt by wage garnishment. The process of wage garnishment is a transparent one. The debtor is fully aware of the amount of the garnished wage to be levied on him and the points used to decide on the amount. An individual has the right to avoid wage garnishment by settling the debts with the creditors. Also, in case the garnished wage has a severe impact on an individual's ability in meeting expenses of the family, then he has the right to appeal in court, for reduction in the amount being deducted due to garnishment. At every step, there are provisions for an individual to nullify or at least reduce the financial burden caused due to garnishing wages.

Although, filing for bankruptcy would negatively affect one's credit history, it is one of the various ways of stopping wage garnishment. Other ways include, taking the help of a debt counselor or filing for debt consolidation.

Wage garnishment is not a mean method, used by the government to make the citizens of United States pay their taxes and debts. In fact, it is a methodical procedure that informs a debtor well in advance about the notification for garnishing wages and the grounds on which such a decision is taken. Complete knowledge about the wage garnishment rules, rights and ways to obtain wage garnishment exemption, along with prompt response to the court's decree, can be of great help in dealing with wage garnishment.