Wage garnishment: how it works, the limits, and how to stop it

Getting a notice that part of your paycheck will be taken can feel scary. But wage garnishment is not the end of the road. Understanding how it works gives you power to respond.

What is wage garnishment?

Wage garnishment happens when a creditor gets a court order telling your employer to hold back part of your pay. That money goes directly to the creditor to pay off a debt you owe. Common reasons include unpaid credit cards, medical bills, personal loans, and student loans.

Your employer does not have a choice once the court order arrives. They are legally required to follow it. But there are strict rules about how much they can take.

How does garnishment start?

In most cases, a creditor cannot just start taking your pay. They usually have to:

• Sue you in court
• Win a judgment against you
• Get a separate court order for garnishment
• Deliver that order to your employer

You should receive notice before this happens. If you do, do not ignore it. Responding can sometimes stop or reduce the garnishment.

Some debts are different. The federal government can garnish your wages for unpaid taxes, federal student loans, or child support without a court judgment first.

How much can they take?

Federal law under the Consumer Credit Protection Act sets a ceiling on how much can be garnished each week. The limit is the smaller of these two amounts:

• 25% of your 'disposable earnings' (your pay after required deductions like taxes)
• The amount by which your weekly disposable earnings exceed 30 times the federal minimum wage

Right now the federal minimum wage is $7.25 per hour. That means if you earn $217.50 or less per week in disposable earnings, nothing can be garnished under federal rules.

Many states have stricter limits that protect more of your pay. Your state's rules apply if they are better for you. Check your state's labor department website to find your local limits.

Child support and alimony garnishments can go higher, up to 50% to 65% of disposable earnings depending on your situation.

What income is protected?

Some income cannot be garnished at all under federal law:

• Social Security benefits
• Supplemental Security Income (SSI)
• Veterans benefits
• Federal student aid

If these funds sit in a bank account, some protections still apply, but the rules get more complicated. Talk to a legal aid attorney if you rely on these benefits.

Can you stop or reduce a garnishment?

Yes, you have options. Here are some concrete steps to consider:

• File an exemption claim. If your income falls below the legal threshold, you can file paperwork with the court to stop or reduce the garnishment.
• Negotiate directly with the creditor. Some creditors will accept a payment plan to avoid or halt garnishment. Get any agreement in writing.
• Challenge the judgment. If you were not properly notified of the lawsuit, you may be able to ask the court to reopen the case.
• Look into bankruptcy. Filing for bankruptcy triggers an 'automatic stay,' which pauses most garnishments right away. Talk to a bankruptcy attorney to see if this fits your situation.
• Contact a nonprofit credit counseling agency. They can help you create a debt repayment plan at little or no cost.

Watch out for debt settlement scams

When you are stressed about garnishment, some companies may promise to 'erase' your debt fast for a big upfront fee. These are often scams. They may leave you deeper in debt with damaged credit. Stick to nonprofit credit counselors or legal aid services.

Your employer cannot fire you

Federal law protects you from being fired for having one wage garnishment. However, that protection does not extend to multiple garnishments at the same time. If your job feels at risk, talk to an employment attorney.

You have more rights than you might think. Taking action early, even just making a call to a legal aid office, can make a real difference.