How Income Garnishment Works

If you fail to make certain payments such as child support or federal tax payments, one of the last resorts is to have your income garnished. Garnishment is a legal procedure that allows a portion of an individual’s earnings to be withheld by an employer to satisfy the debt.

The money will come out of your check before you receive your paycheck.  Although, it should not be a complete surprise because most garnishments require a court order and employers are required to notify workers about the garnishment before it goes into effect.

It may seem like an easier idea to just ignore the notices you receive in the mail.  The longer you deny the problem only brings you closer to having the money withheld from your paychecks.

Title III of the Consumer Credit Protection Act puts a cap on the amount of wages that can be taken form a worker’s paycheck. This leaves the employee with some income, and also prevents creditors from taking excessive amounts to speed up the repayment of debt.

For tax debt, the maximum amount that can be garnished in any pay period may not exceed the lesser of these two figures: Either 25 percent of the employee’s disposable earning, or the amount by which an employee’s disposable earnings for the workweek are greater than 30 times the federal minimum wage.

Rules are different for child support or alimony payments. Garnishment law, administered by the Wage and Hour Division of the Department of Labor’s Employment Standards Administration allows up to 50 percent of a worker’s disposable earnings to be garnished, if the worker is supporting another spouse or child. If the employee is not taking care of a second family, up to 60 percent can be taken. If the support payments are more than 12 weeks in arrears, an additional five percent may be garnished.

Title III also protects an employee from being fired in some instances because of debt collection process. However, the law doesn’t prohibit discharge if the employee’s earnings have been garnished for second or subsequent debts.

One way to avoid garnishment for tax debts is to negotiate the payments.  If you contact the tax officials and alert them of your situation they may be able to work with you instead of garnishing your pay.

Circumstances may arise that may it difficult to make payments on your federal taxes, child support payments or alimony payments. If you find yourself in this situation it may be best to contact the officials to explain your situation and see if you can work out a payment plant instead of garnishment.