Posted by Dennis Jao

Reasons Why Your Wages Could be Garnished

Reasons Why Your Wages Could be Garnished

Your wages may be subject to garnishment when you do not pay financial obligations. A garnishment order is not required for child support, unpaid income tax, or federal student loan payments. Garnishing consumer debts, such as credit cards or medical bills, require a court ruling. In some states, these consumer debts are not subject to garnishment.


Income tax

The Internal Revenue Service (IRS) has the administrative power to garnish your wages without a court order. If you do not pay federal taxes owed, you will receive a certified letter from the IRS detailing your payroll tax. The letter provides full details of your debt and also offers possible garnishment alternatives, such as installment contracts. To avoid levies on your wages, contact the IRS to submit a repayment plan proposal. The amount allowed from an IRS levy depends on the number of dependents and income.

Some states allow forfeiture of wages for unpaid state or local taxes. Laws vary by location.


Child Support

The Family Support Act (FSA) of 1988 allows all child support orders to include immediate wage withholding for both ongoing support and arrears.

For many debts, federal law limits garnishment to 25% of disposable income. However, the commitment to child support has an upper limit. If you have another child, you will be charged 50% of your disposable income; otherwise, the value is 60%. If you are more than twelve weeks late in paying support, the disposable income is subject to a 65% penalty.


Federal student loans

If you do not pay federal student loans, you will receive a garnishment notice from the US Department of Education or the loan guarantor. You will have 30 days to respond in writing and to present your case at the hearing. Ignore the letter, and you will find that your wage is garnished without a court order; the department has this power under administrative law. The garnishment for student loan debt is limited to 15% of disposable income.

If you're behind on your student loan repayments, contact the guarantor responsible for your loan - you may be eligible for income-based payments or deferred payment plans. Avoid garnishing your wage for federal student loan debt by contacting your guarantor.


Court Decisions

Debts other than federal income tax, child support, and federal student loans may be collected by garnishment, depending on the laws in your area of residence. Before a lender can garnish your wages, they must first sue you. You will receive a subpoena. If a court rules in favor of the creditor, you will be obliged to pay the debt. If you do not attend the hearing, a default judgment will be passed in absentia. If you do not pay the debt, the creditor can obtain a garnishment order.

Each state's laws on wage garnishment for court decisions differ, and some states do not allow this at all. Avoid the problem entirely by working with your creditor to pay off your debt before it goes to court.


Can your wage be garnished without a court order?

In several cases, a creditor can only garnish your wages after winning a lawsuit against you. However, some creditors, including federal agencies, can garnish your wages without a judge's order.


Wage Garnishment

A creditor garnishes a debtor's wages when he fears that the debtor will not pay his debt voluntarily. Wage garnishment, sometimes called wage levies, require your employer to remit part of the salary to the creditor until you pay off the debt. Some states, Pennsylvania, Texas, South Carolina, and North Carolina, do not allow wage garnishment unless if it involves:

  • The payment of child support.

  • Student loans.

  • Taxes.

  • Other debts to a government agency.

Court-Ordered Garnishment

Some type of consumer debt, such as credit card debt or medical debt, cannot be collected by garnishment without a court order. The lender must first obtain a judgment against you and then initiate enforcement proceedings. You must receive written notice of your creditor's plan to garnish your earnings before your creditor actually begins the garnishment.


Administrative Wage Garnishment

Certain types of debts do not require legal action or a court decision before wage garnishment begins. If you don't pay taxes or student loans, or if you owe money to a federal agency, such as the SSA (Social Security Administration), your salary can be garnished without a court ruling. However, you will be notified in writing of the garnishment and have the option to request a hearing. During the court hearing, you can explain why you think you are not indebted to the creditor or explain that a wage garnishment would cause significant hardship for you and your family.


Your Rights

Under federal law, your employer cannot fire you or discriminate against you for wage garnishment. However, if more than one creditor submits a garnishment order against you, you risk losing your job. If you're worried about being hit by more than one garnishment, you may want to speak to a bankruptcy lawyer. The automatic bankruptcy stay can stop the execution of wage garnishments, thus protecting you from disputes with your employer.


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Dennis Jao
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