How to Deal With Wage Garnishment

Wage garnishment is an action that takes place when a court rules a portion of your income must be redirected to paying off debt. The court orders your employer to withhold a portion of your income and send it to a creditor.  

If you’re facing wage garnishment, it can be confusing and frustrating.  

Wage,Garnishment

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How Does Wage Garnishment Work?

Wage garnishment happens under a few circumstances. Oftentimes, it happens after a creditor sues you for not paying your debt. If they win in court, you will have your wages garnished until your debt is repaid.
In some cases, creditors don’t need to win a court case to force you into wage garnishment. This is normally the case when you owe back taxes, student loan payments, or child support.
In either case, a court will send notices to you and either your bank or employer. After the notice is sent, garnishments will usually begin in less than 30 business days, with the exact time depending on your state and your creditor. After that, the garnishments continue until your debt is paid back. Normally, court fees and interest are added on top of your debt payments.

 

Types of Wage Garnishment

There are several types of wage garnishment. The portion of your income that can be garnished will depend on the type of debt you incurred.

Consumer Debt Including Medical Bills 

There is a federal limit of 25% of your income which exceeds the federal minimum wage that can be garnished. Broken down, if your weekly income is less than $217.50 (federal minimum wage is $7.25 per hour), garnishment is impossible. However, 25% of your income above $217.50 per week will be garnished.

Child Support & Alimony

If you’re supporting another child or spouse, there is a 50% limit on wage garnishments. But if you’re not currently supporting another child or spouse, the limit is increased to 60%.

If you miss payments by 12 weeks or more, an additional 5% can be added.

Federal Student Loans
Federal student loan debt has a flat 15% weekly disposable income limit for garnishment.

The Federal Government is currently offering Covid-19 relief programs that affect student loan debt. As a part of the relief programs, all federal student loan wage garnishments have been halted. Wage garnishments will be stopped until at least September 30th, 2021.

Tax Debt
As you would expect, the rules become more complicated once the IRS is involved. Typically, garnishments cap at 15% of disposable income. However, the exact rate varies based on factors such as standard deductions, dependents, and income.

Type of debt Percent of weekly disposable income
Credit card and medical bills, personal loans and most other consumer debts Either 25% or the amount by which your weekly income exceeds 30 times the federal minimum wage (currently $7.25 an hour),  whichever is less.
Child support and alimony 50% if you are supporting another child or spouse; otherwise, up to 60%. 

If you are more than 12 weeks late in payments, an additional 5% may be taken.

Federal student loans 15%
Taxes Generally, up to 15%. 

 

How much of your wages can be garnished?

There are several federal restrictions on how much of your wages can be garnished. Refer to the table below for a breakdown of the income-based limits

Weekly Biweekly Semimonthly Monthly
$217.50 or less:

NONE

$435.00 or less:

NONE

$471.25 or less:

NONE

$942.50 or less:

NONE

More than $217.50 but less than $290.00:

Amount ABOVE $217.50

More than $435.00 but less than $580.00:

Amount ABOVE $435.00

More than $471.25 but less than $628.33:

Amount ABOVE $471.25

More than $942.50 but less than $1,256.66:

Amount ABOVE $942.50

$290.00 or more:

MAXIMUM 25%

$580.00 or more:

MAXIMUM 25%

$628.33 or more:

MAXIMUM 25%

$1,256.66 or more:

MAXIMUM 25%

Taken from: https://www.dol.gov/agencies/whd/fact-sheets/30-cppa

 

What to do when you receive a garnishment order?

When you receive a garnishment order, your options depend on the type of debt in question.

 Consumer Debt

 Wage garnishment from consumer debt is perhaps the simplest. Normally, notices for a wage garnishment from consumer debt come with instructions on how to object.

 

The process for wage garnishment objection usually includes instructions on:

  • Whether your objection must be in writing
  • Which court-provided documents you must fill and submit
  • The type of information your objection must include being successful
  • The objection filing location
  • The objection filing deadline
  • To whom you must submit copies of your objection, if necessary
  • The date and time of an objection hearing, if applicable

 Child Support & Alimony

 For wage garnishment stemming from child support or alimony, you must request a court hearing to challenge the garnishment order. Normally, you can challenge what you owe or try to modify your child support order. However, there are limited circumstances that would allow you to do so.

 

You can challenge the wage garnishment amount based on:

  • A change in your circumstances, such as supporting another dependent
  • A drop in income stemming from job loss, job change, or any other cause
  • Other extenuating personal circumstances that make it financially difficult to make the full, original payments

 Federal Student Loan Debt

Challenging a garnishment order for student loan debt requires a court hearing with your loan servicer in writing. The hearing must be postmarked within 30 days of the date the garnishment notice was sent.

Tax Debt

The only way to challenge tax debt garnishment is to request a CDC hearing. During the hearing, you may dispute the amount you owe or offer alternatives to wage garnishment. You can also use the opportunity to claim applicable exemptions.

 

You can add a table element with the different Types of Debt and the best way to object it’s WG.

You can use this page as a reference, under “What to do when you receive a garnishment order”

Type of debt How to object to garnishment
Child support Request a court hearing to challenge what you owe or modify your child support order because of a change in personal circumstances, like job loss or drop in income.
Consumer debt Check your garnishment notice for instructions on how to object to the garnishment.
Federal student loans Request a court hearing with your loan servicer in writing, postmarked no later than 30 days from the date the garnishment notice was sent.
IRS tax debt Request a CDP hearing to dispute the amount owed or discuss alternatives to garnishing your wages.

Taken from: https://www.dol.gov/agencies/whd/fact-sheets/30-cppa

 

How Debt Consolidation Helps With Wage Garnishments?

 If you can take advantage of any of the above opportunities to remove or lessen your garnishments, that might be a good course of action. However, it’s often impossible to fight your garnishment order. Even if you’re able to lower your wage garnishments, making up for your loss in income can still prove difficult.
If you’re in this situation, one possible course of action is debt consolidation. While it may sound confusing at first, you might be able to use a debt consolidation loan to stop wage garnishment from happening.
A debt consolidation loan is a form of debt refinancing. They have often secured loans, so you will likely need to provide collateral.
Once you get approved for a debt consolidation loan, you can repay your creditors before they manage to have a wage garnishment notice sent to you. That way you have more time to handle your financial challenges and you can save your credit score from the consequences.

How can I consolidate my debt to help my Credit Score?

 

Final Thoughts - Is Debt Consolidation a Good Solution for Wage Garnishment?

Debt consolidation is one of the potential solutions if you’re facing overwhelming debt. But it’s especially worth your consideration if you’re facing legal action such as wage garnishment.
Debt consolidation isn’t a magic pill that will remove your financial worries. But it can provide you with more time and a more financially ideal solution than having your employer forced to cut your paycheck to repay your creditors.                                                                                                                                                

The right debt consolidation can give you the time and breathing room you need to handle your debt. Debt is never easy to handle, but a debt consolidation loan is often the best way to handle overwhelming debt and avoid more serious consequences to your credit score and income.

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