How Much of my Wages Can Be Garnished?
When one of your creditors sues you and receives a judgment, he or she can then file a motion to garnish your wages in order to collect on the amount you owe. Some creditors are able to garnish your wages without having to get a judgment against you, including creditors whom you owe for student loans, child support and back taxes. The amount that can be taken from your income is limited by state and federal law. The amount that can be garnished will depend on what type of creditor is garnishing your wages.
Federal limits for how much of your wages can be garnished by judgment creditors
Under federal law, judgment creditors who are garnishing your wages are forbidden from taking more than 25 percent of your disposable income or the portion of your income exceeding 30 times the federal minimum wage, or whichever is the smaller amount. To figure your disposable income, subtract your required deductions from the total amount of your paycheck, including state and federal taxes, state unemployment insurance taxes, mandatory retirement deductions and social security deductions. Voluntary deductions, including charitable contributions, savings plans and life insurance, are not subtracted.
For example, $7.25 per hour is the current federal minimum wage. If you bring home $800 per week after subtracting your required deductions, then 25 percent is $200. 30 times the federal minimum wage is $217.50, meaning that the amount of your disposable income that exceeds that amount is $582.50. This means that the maximum amount a judgment can garnish from your weekly pay is $200 since it is the lesser of the two amounts.
Federal limits for student loan debt garnishments
The law allows the U.S. Department of Education or any agency collecting for it to garnish your wages in an amount of up to 15 percent of your disposable income. Unlike judgment creditors, these agencies are not required to file lawsuits in order to garnish your wages. All that they must do is provide you with notice of their intent to seek a garnishment of your wages.
Federal limits for child support or alimony wage garnishments
Modified or new child support orders now include automatic wage withholding orders for child support even if it is not delinquent. Your employer takes out the payment amount from your paycheck and sends it either directly to the other parent or to the state agency that sends it to the other parent. If you also are ordered to provide health insurance for your children, that payment will also be subtracted from your paycheck. If you prefer, you are able to agree to pay the other parent on your own without wage withholding.
If you are currently supporting a child or a spouse who isn’t the subject of your child support or alimony order, up to half of your disposable earnings can be garnished under federal law. If you do not have another child or spouse to support, up to 60 percent of your disposable income may be garnished. For arrearages that are behind by greater than 12 weeks, another 5 percent may be subtracted.
Federal limits for tax debt garnishments
Like student loans and child support creditors, the IRS does not have to sue you in order to garnish your wages for back taxes. The IRS also sets its own limits for the amount the taxing authorities can garnish, basing it on the amount of your standard deduction amount and the number of your dependents. State taxing authorities sometimes use their own formulas. Before the IRS begins garnishing your wages, it will send you a notice.
State limits on how much of your wages can be garnished
While states are able to provide debtors with additional protection for wage garnishment actions, they are not allowed to provide you with less than the protection afforded by the federal limits. Most states follow the federal limits when setting their own, but some states do provide more protection. To learn about your state’s laws, you can check the laws by reviewing the website for your state’s department of labor.
If you are currently facing a lawsuit by a creditor, it is important for you to act quickly. Our bankruptcy attorneys may be able to help you to stop garnishments and lawsuits. To learn more, contact the Law Offices of Georgette Miller and Associates today.