Garnishment

Garnishment Explained: What It Is, How It Works, and How to Respond

What is garnishment?

Garnishment is a legal process that allows a creditor to collect unpaid debts by directing a third party—commonly an employer or a bank—to withhold funds from a debtor’s wages, bank account, tax refund, or other assets. Garnishment typically follows a court judgment, though some exceptions (for example, IRS levies) do not require one.

How the process works

• A creditor sues and obtains a court judgment showing you owe money, then seeks a garnishment order.
• The court (or the creditor, in certain cases like tax levies) issues a writ of garnishment or levy.
• The third party (employer or bank) is served and must withhold the specified amount and remit it to the creditor.
• Garnishments continue until the debt is satisfied, a payment plan is arranged, or the court orders otherwise.

Garnishments can harm credit indirectly because they usually reflect unresolved debt and judgment activity.

Common types of garnishment

• Wage garnishment: Employer withholds part of your paycheck.
• Bank levy (account garnishment): Bank freezes and surrenders funds from your account.
• Tax-refund intercept: Government agencies offset tax refunds to satisfy debts like back taxes or child support.
• Property or asset seizure: Court-authorized seizure and sale of property (real estate, vehicles, valuables).

Who can garnish wages

Entities that commonly obtain garnishments include:
– Private creditors (credit cards, medical providers, lenders) after obtaining a judgment.
– Government agencies (tax authorities, agencies enforcing child support).
– Student loan holders/collectors for defaulted loans.
– Courts to collect fines, fees, restitution, or enforcement of judgments.
– In some states, homeowners’ associations (if they obtain a judgment).

State laws vary, so the available remedies and procedures depend on jurisdiction.

Notices and your rights

• You should receive formal notice (court papers or a legal filing) before a garnishment is enforced.
• Notices typically explain the debt, the creditor, and how to contest the garnishment.
• You may have the right to a hearing or to raise defenses (e.g., the debt isn’t yours, you were already paid, procedural errors).
• An employer generally cannot fire you solely because your wages have been garnished for a single creditor (federal protection), though state rules and employer policies may create exceptions.

Limits on wage garnishment

Federal limits under the Consumer Credit Protection Act (CCPA) set maximums for most consumer debt garnishments:
– The lesser of:
– 25% of weekly disposable earnings, or
– The amount by which weekly disposable earnings exceed 30 times the federal minimum wage (30 × $7.25 = $217.50).
– If weekly disposable income is under $217.50, no garnishment applies under this federal rule. If it is between $217.50 and $290, only the amount over $217.50 may be garnished.

Notes:
– “Disposable income” = gross pay minus legally required deductions (taxes, Social Security, etc.).
– These federal limits do not apply to certain debts: unpaid taxes (IRS levies), child support, many federal student loan collections, bankruptcy orders, or voluntary wage assignments. Federal agencies and federal student loan holders may use other statutory limits (for example, different percentage caps).

State laws may provide greater protection (lower garnishment amounts or broader exemptions). When state and federal rules differ, the most protective (lowest garnishment) limit applies.

Strategies to prevent or reduce garnishment

• Communicate early: Contact creditors to negotiate a payment plan, settlement, or forbearance.
• Request a hearing or file objections: Use any procedural opportunities to contest the garnishment.
• Seek legal advice: A consumer law attorney can assess defenses, claim exemptions, or represent you in court.
• Credit counseling: Nonprofit counselors can help with budgeting and negotiating with creditors.
• Claim exemptions: Many states protect certain income (Social Security, certain benefits, pensions) or allow exemption claims to shield funds.
• Consider bankruptcy: In some cases bankruptcy can stop garnishments and discharge debts—consult an attorney.
• Monitor accounts and mail closely to catch notices or levies early.

Important considerations

• Some income sources are often protected: Social Security, disability benefits, certain pensions, and some public benefits may be exempt from garnishment. State rules vary.
• Child support and tax debts have special enforcement rules and may be subject to higher garnishment rates.
• If garnishment causes financial hardship, you can petition the court for a reduction based on inability to pay or necessary living expenses.

Example

High-profile judgments sometimes lead to garnishment of pensions or other income streams. Such cases illustrate that garnishment can be used to enforce large civil judgments, though state law and the type of income will affect how much can be taken.

Bottom line

Garnishment is a powerful collection tool that lets creditors access wages, bank accounts, refunds, or assets, often after a court judgment. Federal law limits garnishment for most consumer debts, and many income types are protected, but exceptions (taxes, child support, some student loans) exist. If you face or expect garnishment, act quickly: review notices, consult legal or counseling resources, and negotiate with creditors to reduce or avoid the seizure of funds.