When you have an outstanding debt that you cannot pay in full, some creditors will go to court to try and garnish your wages. Whether or not these creditors can actually take a portion of your wages depends on the relevant laws and your specific circumstances. The following article examines this important legal and financial issue.
Garnishments are governed by both federal and state laws. Federal law limits the amount that a creditor can have withheld from your earnings to either 25 percent of your disposable income or the amount of your disposable earnings that is more than 30 times the federal minimum wage. The lesser of the two is what your employer will withhold.
The law stops any wage garnishment, however, if you make a very-low income. For example, if your monthly income is $942.50 or less, this stops any attempt by creditors at garnishing your wages, according to the Department of Labor.
Depending on your state of residence, the state statutes regarding garnishment might be more lenient than federal law. For instance, Pennsylvania and North Carolina stop most garnishments with a few exceptions, such as garnishing wages for spousal or child support, student loans, and state taxes. Also, a state might reduce the percentage of your earnings a creditor can garnish. Illinois, for example, limits garnishment to 15 percent of your wages.
Filing for bankruptcy will stop most garnishments and prevent any creditors from obtaining garnishments against you while your bankruptcy petition is proceeding through the legal system. The court will issue an "automatic stay" which stops most creditors from taking any actions to collect on the debt you owe.
Child support and alimony are not included in an automatic stay, so if you own this kind of debt your earnings can still be withheld by your employer. The automatic stay ends when your debt is discharged or your bankruptcy petition is disallowed by the court. If your debt was discharged, then the creditor cannot file for a garnishment.
Certain types of income or earnings are not subject to being garnished for most types of debt. For example, if your income is from social security, that money cannot be garnished for common debts, such as credit card debts, automobile debts, or medical bills. You might not be able to stop the garnishment if the debt is for child or spousal support, depending on the relevant statutes of your state.
Avoiding wage garnishment is a complex area of the law. For expert advice, get stop garnishment legal help from a qualified attorney.