Creditors who receive a legal judgment against you can garnish your wages. They can also take part of your pay if you get sued and don't respond in a timely manner. The creditor doesn't have to warn you of the garnishment or show you proof of it, though some will. Only federal and state tax collectors are exempt from the requirement to get a judgment before taking money from your paycheck.
When your employer withholds part of your check to pay a debt, it’s called a wage garnishment. This withholding follows a court order or judgment against you that results from a lawsuit being decided in the creditor's favor. You will receive notice of the lawsuit and must respond to it with a reply that admits or denies the debt is yours. The court considers the allegations true if you fail to respond to the lawsuit or deny the allegations it contains.
You still have protections under the Consumer Credit Protection Act (CCPA) if a creditor gets a judgment against you. That law keeps you from being fired if you receive a wage garnishment and limits the portion of your wages that can be taken. The CCPA's termination provisions only protect you the first time your wages are withheld. The law also limits the amount of money the employer can withhold from your check after taxes and withholding are taken out.
If you work a low-wage job the creditor has to leave you at least $217.50 a week or $870 a month in take-home pay. The weekly and monthly minimum numbers, based on a $7.25 minimum wage, can change if the federal minimum wage increases.
If your pay is garnished for child support the amount taken out can exceed 25% of your net income. You can lose 50% if you currently have a spouse and another child to support or 60% if you don't support anyone else. If you're behind 12 or more weeks on your child support, an additional 5% of your check is also subject to garnishment. The limits don't apply to bankruptcy or federal or state taxes. The U.S. government typically abides by the Debt Collection Improvement Act and takes up to 15% of disposable income, while the Higher Education Act gives collectors the right to garnish up to 10% of net pay for defaulted student loans.
Chris Brantley began writing professionally for a financial analysis firm in 1997. From 2000 to 2004, he worked as a financial advisor, specializing in retirement planning and earned his Series 7, Series 66 and insurance licenses. Brantley started his full-time writing career in 2012 and has written for a variety of financial websites, including insurance, real estate, loan and investment sites. He holds a Bachelor of Arts in English from the University of Georgia.