Wage Garnishment: How it Works and What You Can Do
When you think of garnishment, is debt the first thing that comes to mind? The first time I heard someone talking about garnishment here in the payroll office, I thought ‘What? Garnishment? Like what chefs put on food’ That did not make sense though. After asking my co-workers what that was I knew that I needed to write an article on it just in case someone else was thinking the same as me and had food on their mind instead of debt. Garnishment is not food. Below is what you really should be thinking of when you hear the word garnishment.
What is wage garnishment?
Wage garnishment is when a court orders that your employer withholds a specific portion of your paycheck. This deduction is for satisfying a debt or legal obligation. The money goes from your paycheck directly to the creditor or person to whom you owe money until your debt is resolved.
Some wage garnishments might include child support, unpaid credit card debt, unpaid taxes, medical bill, alimony or federal student loans. You have legal rights to include a cap on how much can be taken at once. Also, your wages can’t be garnished without a court order when it comes to if you have debt from a credit card or most loans. For the government taxes, child support, alimony or student loans, the rule doesn’t apply.
Garnishments are typically not a set dollar amount, it is a percentage of an employee’s compensation. This can be stressful but it depends on how much money is being withheld from your paycheck. Below is a deeper dive into how wage garnishment works and what you can do about it.
How does wage garnishment work?
According to a study that ADP reported on in 2016 7% of 12 million employees had at least one wage garnishment. It’s 10.2% for adults ages 35 to 44 the top reason for this was child support, overdue taxes, consumer debts, and student loans.
The most often way garnishment happens is when a creditor sues you for not paying a debt and wins in court. If you owe back taxes, federal student loans or child support then a creditor can force garnishment without a court order.
Before the wage garnishment is applied to you, the court sends notices to you and your employer or bank and then the garnishment payments begin. This garnishment continues until the debt is paid.
Different types of debt and how much can be garnished:
How to avoid wage garnishment:
File for bankruptcy: If you are buried in debt, this might be a good option for you. It would put an immediate halt to your garnishment but you should definitely talk with a financial advisor first to see if this is right for you.
Work with a credit counselor: Credit counselors can negotiate with the creditor on your behalf to get on a more manageable payment plan.
Fight it if you believe that you are in the right: Creditors could be charging you for a debt that you don’t have or have already paid off. They could also have messed up the process and are charging you more money than needed each pay period.
File a claim of exemption: You might be able to file a claim of exemption and decrease or stop the garnishment payment due to being the head of the house and needing to take care of a child or an elderly relative.
Negotiate with the creditor: Try to work something out with the creditor like having a smaller monthly payment plan. You could also try and pay the whole debt in full but that is not recommended because you could be putting yourself into more debt because you wouldn’t have any money left to pay your other bills.
Bottom Line
Wage garnishments can be stressful but if you start building a budget and stick to it, it will definitely help you in the long run by avoiding another garnishment. If you don’t see any way of getting out of debt I definitely recommend working with a credit counselor or a financial advisor. They can find a better way to help you have some debt relief such as a payment plan with a decreased amount of money than the one you have now or seeing if filing for bankruptcy is the right choice for you.
Tessa joined Superior Trucking Payroll Services in September of 2022 after graduating with a Bachelor’s degree in multimedia journalism from Grand Valley State University. She has a passion for writing and binge-watching TV series.
[form id="8639" /]