Much stressed is caused to people who are being chased by creditors. Certainly nobody wants to fall into debt and not be able pay their bills - but it happens and you have protections from those seeking payment from you.
One of the scariest terms people hear about is "
garnishment". Most people understand that this means your employer is obligated by court order to take your paycheck and apply the funds toward your outstanding debt. However, many people are very unclear as to the specifics and limitations of this legal process. Most fear that their entire paycheck can be taken from them!
Fortunately, for you this simply is not true. Title III of the Consumer Credit Protection Act (CCPA) limits the amount of pay that can be garnished and is applicable in all states. The amount of pay that can be taken per week is dependent on what is called "disposable earnings". This income is the amount you get in your paycheck after taxes and other mandatory items are paid. For all deductions not stemming from
bankruptcy, taxes or child support obligations, the maximum amount that can be taken is the lesser of 1) 25% of a person's disposable earnings or 2) the amount by which a person's disposable income is thirty times greater than the federal minimum wage ($7.25).
In short, if your paycheck per week is $217.50 or less, you can't be garnished. By extension, if your bi-weekly paycheck is $435.00 or less, you can't be garnished. If your weekly earnings are between $217.50 and $290.00, the amount above $217.50 can be garnished. Any pay above $290.00 would mean that 25% could be taken for
garnishment. For example, if you make $750 per week, $187.50 could be taken at maximum. As you can see, your entire paycheck simply can't be taken from you. Plus, many people earn so little that they are immune from garnishment.
Further, tips are not subject to
garnishment. Garnishment is only based on the wage paid by the employer in these instances.
However, if you owe money for child support, the picture is a little different. Public policy informs us that children should receive proper support even if this is detrimental to the owing adult. As such, 50% of a person's wage can be garnished if they are simultaneously supporting another child. If the person is not supporting another child, then 60% of the wage may be garnished.
There are also exceptions for taxes and cases involving
bankruptcy that are beyond the scope of this article.
Finally, if you find yourself falling behind on bills or are being garnished, consult with a qualified attorney who can guide you. This article is not meant to be legal advice but is meant merely to provide a general understanding of the
garnishment procedure. If nothing else, it should let you know that garnishment is not the financial Armageddon that so many fear it to be. It is certainly no fun, but you should still be able to meet your basic necessities.
