Understanding garnishments is important whether you’re a debtor, a creditor, or an employer who has received a garnishment for an employee. Below we’ve answered some common questions to help you understand your rights and obligations regarding garnishments.
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A garnishment is a court order directing a third party (garnishee) in possession or control of a debtor’s personal property to withhold that property on behalf of a creditor.
Garnishments are one of several methods available under the law to collect money owed. They can only be used to seize property that’s held by a third party. If a debtor’s personal property is not held by a third party, it cannot be garnished.
A garnishment may also be referred to as a “writ of garnishment.”
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There are two types of garnishments: wage garnishments and non-wage garnishments. Wage garnishments collect personal earnings. Non-wage garnishments collect other types of personal property, such as money in a bank account. Real property, such as a house, cannot be garnished.
Some of a judgment debtor’s property will be exempt from garnishment. A debtor’s wages are always partially or, in some cases, totally exempt. Whether money in a bank account is exempt depends on the source from which the money came. Any nonexempt personal property belonging to a judgment debtor can be garnished.
Wage garnishment is the process through which a portion of a debtor’s paycheck is taken to repay a debt. However, only a portion of the paycheck is subject to garnishment—the other portion is exempt. In some cases, their entire paycheck may be exempt.
The laws regarding exemption of personal earnings vary by state, but each state falls into one of three categories. States either follow federal law, enact their own laws, or prohibit wage garnishment entirely for consumer debt.
So, how much of a paycheck can be garnished under each category? To do the calculations, you need to know the frequency of a debtor’s pay periods and the amount of their disposable earnings. (Disposable earnings are a person’s take-home pay, the amount remaining on a paycheck after all the deductions required by law have been taken.)
For our examples below, Donny gets paid biweekly (every two weeks) and his take-home pay is $1,000 per paycheck.
Federal Wage Garnishment Law
Title III of the Consumer Credit Protection Act (15 U.S.C. § 1671), exempts take-home pay equal to 30 times the federal minimum wage for each week in the pay period and allows a maximum of 25% to be garnished. The current federal minimum wage is $7.25 an hour. So, the exempt amount for a weekly pay period is $7.25 x 30 = $217.50. For a biweekly pay period the exempt amount is doubled: $217.50 x 2 = $435.00.
The amount subject to garnishment is 25% of take home pay OR the nonexempt take-home pay in its entirety, whichever is less. Here’s what that means for Donny:
Utah, Arizona, Idaho, Montana, Wyoming, Ohio, Kansas, Oklahoma, Michigan, Georgia, Rhode Island and Louisiana follow the federal wage garnishment law.
State Wage Garnishment Laws
Numerous states have enacted their own laws to determine the amount of take-home pay exempt from garnishment. The calculations vary widely by state.
States that have enacted their own wage garnishment laws include: Washington, Oregon, California, Hawaii, North Dakota, South Dakota, Wisconsin, Iowa, Alabama, West Virginia, Alaska, Delaware, New Jersey, Connecticut, New York, Vermont, New Hampshire, Massachusetts, and Maine.
Let’s find out how much of Donny’s paycheck is subject to garnishment in Oregon and Massachusetts.
Oregon: Oregon law provides for 75% of take-home pay or $509 in a biweekly pay period—whichever amount is greater—to be exempt.
The outcome in Oregon is the same as under federal law, but the calculation to get there is different.
Massachusetts: In Massachusetts, 85% of take-home pay is exempt, or 50 times the federal or state minimum wage for a weekly pay period, whichever is greater. The minimum wage in Massachusetts is $13.50 so that is the figure used in the calculations.
The outcome in Massachusetts is vastly different than in Oregon or under federal law.
States Prohibiting Wage Garnishments
Texas, South Carolina, North Carolina, and Pennsylvania do not allow wage garnishment for consumer debts. However, wage garnishments are allowed for child support, alimony, taxes or student loans.
Non-wage garnishments are attached to tangible and intangible personal property other than personal earnings. Examples include money in a bank account, accounts receivable, or something of value that a person owes or will owe the judgment debtor. (For example, if the debtor is a landlord, rent from a tenant could be a non-wage garnishment as rent does not qualify as personal earnings.)
Just like with wage garnishment, the personal property seized through non-wage garnishment must be in the possession of a third party.
Other than personal earnings, the most common personal property that is garnished is money in a bank account. A garnishment served on a bank is sometimes called a non-periodic garnishment, attachment, or bank account levy.
Real property, such as a house or land, cannot be garnished.
Some funds in a bank account can be exempt while other funds are not. If the funds come from public benefits, life insurance benefits, retirement accounts, child support or alimony, the money is exempt. If the money comes from personal earnings, or wages, a portion will be exempt. Exemptions vary by state, so different rules may apply to your situation.
The burden of demonstrating if personal property (other than personal earnings) is exempt is on the judgment debtor. Exempt property can and will be seized if judgment debtors do not protect their rights.
Getting a garnishment involves several steps. A prerequisite to a getting a garnishment is obtaining a judgment that requires the payment of money. (An exception to this rule is in relation to the federal government, which can issue garnishments without a judgment for unpaid federal taxes, federal student loans, and past due child support.)
The super-simplified process of getting a garnishment judgment usually looks like this: Dispute arises over payment of money. Parties go to court. If the court decides one party owes the other money, it will issue a judgment stating which party owes the other party money and the amount owed.
Once the judgment is issued, a judgment creditor files an application with the court seeking a garnishment to be issued. The garnishment allows for the seizing of personal property belonging to the judgment debtor identified in the application.
Typical garnishment applications include information about:
Prejudgment writs of garnishment are instruments used by creditors to seize property before the creditor obtains a judgment against the debtor. As with all garnishments, the property must be in the possession of a third party.
Prejudgment writs of garnishment are extremely rare. To get one, a creditor typically has to demonstrate the following:
Additional realities need to be demonstrated, as well, such as the debtor avoiding service of process or intending to leave the state to defraud creditors.
Posting of security in an amount sufficient to cover the value of the property and any costs or actual damages incurred by the debtor is usually required.
Once an employer or a bank has been served with a garnishment, they become a garnishee. Being a garnishee—whether for wage or non-wage garnishments—comes with responsibilities, including:
Garnishees of wage garnishments have some additional duties compared to their non-wage garnishment counterparts. A wage garnishment garnishee is required to respond to the wage garnishment by providing the amount of the employee’s take-home pay that will be withheld each pay period, and to deliver that money as soon as possible.
The duration of a wage garnishment varies depending on the state. This variance requires the garnishee to be knowledgeable about the laws in the state where they are located, as they must uphold their duties for the length of the garnishment. Withholding wages after the garnishment expired or not withholding wages when the garnishment is still in effect can create liability for the garnishee.
If your bank account or paycheck is subject to garnishment, as a judgment debtor you have the right to challenge the garnishment. However, you need to be aware of the deadline. In the papers the garnishee delivered to you with the garnishment, there will be a form used to challenge the garnishment. On that form, the deadline to file a challenge with the court will be included. Deadlines vary by state but typically are from one week to a month. For example, in Arizona a judgment debtor has 10 business days from receiving notice of the garnishment to challenge it.
Grounds to challenge a garnishment typically include:
To determine if there is a basis for challenging a garnishment, review the garnishment and the garnishee’s response carefully to ensure that the information is accurate. Next, determine if the property subject to garnishment is exempt, either partially or in its entirety. Exempt property can be seized if a judgment debtor does not take action.
If your bank account has been hit with a garnishment, the source of the money in the account determines if it is exempt. The burden of proof is on the judgment debtor to show property is exempt.
Bankruptcy is an option to stop some garnishments, at least temporarily. The filing of a petition for bankruptcy and delivery to the garnishee will immediately stop a garnishment. An automatic stay goes into effect upon the filing of a bankruptcy petition, which prohibits creditors from attempting to collect a debtor’s debts. The automatic stay is a provision in the bankruptcy code found at 11 U.S.C. § 362.
The automatic stay remains in effect until the bankruptcy case ends or an agreement is reached by the debtor and a creditor. When the bankruptcy case ends, eligible debts are discharged forever. If the bankruptcy case is dismissed prior to its conclusion, collection efforts can resume.
Some debts, however, are not discharged through bankruptcy. Examples include child support and alimony; student loans; debts for willful or malicious injury; debts for wrongful death; and taxes. Creditors for these types of debts can apply for and receive a lift of the automatic stay.
The amount of your paycheck that can be taken through wage garnishment depends on the state your employer is located in. Generally, a maximum of 25% of take-home pay will be eligible for garnishment, as 75% or more of a debtor’s take-home pay is usually exempt.
The length of a wage garnishment varies by state. The duration can last anywhere from 30 days to a year. For example, in Washington, a wage garnishment is effective for up to 60 days. In Wyoming, it is effective for up to 90 days. Wage garnishments in Oklahoma can last for 180 days, while in Utah, a wage garnishment is effective for up to one year.
An employer is required to withhold the non-exempt money in the employee’s paycheck for as long as a wage garnishment remains in effect. The employer must also provide the judgment creditor with information regarding the employment status of the employee and amount of the employee’s paycheck being withheld. Finally, the employer is responsible for delivering the money to the judgment creditor every pay day.
Typical property that can be exempt from garnishment include public benefits and retirement accounts. Wages are partially exempt, and may be fully exempt depending on the rules in your state and how much take-home pay you make.
No. The maximum amount of take-home pay allowed to be garnished is greater for debts arising from unpaid child support, alimony, or taxes. 50% of a debtor’s take-home pay is a typical amount to be seized for these types of debts, though it varies by state.
Garnishment is served on the third party in possession or control of the property (often an employer or bank). A wage garnishment is served upon the registered agent for the employer of the judgment debtor. A non-wage garnishment or bank levy is served on the registered agent for the bank. The sheriff, a constable, or a private process service company will serve the garnishment and provide a proof of service containing the details of the service. The proof of service is filed with the court.
Additional documents need to accompany a garnishment. The additional required documents may vary by state, but generally include: a list of property that is exempt; a form for the garnishee to respond to the garnishment, containing instructions about duties and responsibilities; and a form that allows the judgment debtor to challenge the garnishment and request a hearing with the court.
Not necessarily. Federal law allows the federal government to garnish wages without first obtaining a judgment to satisfy owed debts such as unpaid federal taxes, student loans, past due child support, and over payment of unemployment benefits. This process is known as administrative wage garnishment. The applicable provision of federal law can be found in the Code of Federal Regulations at 31 CFR § 285.11.