What is Wage Garnishment and What Are its Limitations?

Wage garnishment applies to some amount of the wages that an employer would need to withhold as repayment for debt of an employee. The same amount is handed over to the creditor. Wage is garnished when a person who owes debt is unable or unwilling to pay back the due amount as per the agreed upon payment terms. For many creditors this is one of the most potent ways of recovering their bad debts. Wage garnishment can also be one of the last resorts for the debtor to pay back the due amount.

IRS is one institution that regularly uses this to recover its dues. Apart from IRS wage garnishment can also be used by state governments, private creditors or even ex-spouse demanding alimony or child support. In addition to garnishing for taxes, federal and state governments can seek to attach wages if a person defaults on government-backed student or business loans.

However wage cannot be garnished without obtaining a court order. For this the lender will have to file a lawsuit and once the judgment in the lender's favor they can more to the employer and can have a certain portion of the wage garnished to cover their debt along with the interests. In case the employer fails to garnish the wages they are held accountable and have to pay the due amount. However some creditors can garnish wages without obtaining a court order and they include the IRS and the Department of Education. They can set notices to employers to start garnishing wages as soon as they take up any case.

Limitations of Wage Garnishment

Wage garnishment laws and their clauses can differ from state to state but they have the same clauses on most occasions. Let us take the wage garnishment laws in California and take a look at the limitations of that these laws have. In his regard the Federal law has strictly limited the amount of money that can be garnished from a paycheck. According to this law the state must provide as much protection to the debtor as the Federal law does. They can provide more protection to the debtors as per their discretion.

There have been recent amendments to the wage garnishment laws in California and effective July 1, 2013 law in California offers more protection to the debtor than the Federal law. If a debtor earns the minimum wage as specified by the law or close to the minimum wage there are strict limitations that the courts need to adhere to while deciding on a case of wage garnishment. The creditors are allowed to garnish less than 25% of the debtor’s disposable income for any workweek or the amount by which a debtor's weekly disposable earnings exceeds 40 times the state hourly minimum wage. The current minimum wage per hour is $8:00. Also disposable income is calculated after all the necessary deductions as mandated by the law.

If you are likely to face wage garnishment it would be advisable that you immediately get in touch with an attorney who would advise you with your case and how to avoid wage garnishment.

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