Garnishment

en Español

If you're having trouble paying your bills, you may be in danger of a creditor getting a court judgment against you and garnishing your wages or property, that is, taking some of property or money from your paycheck to pay the judgment.

Garnishment can be an effective tool for the creditor, but it can have a devastating impact on you. That's why there are various federal and state law protections in place to make sure that garnishment is properly used.

If you're in debt and having trouble making monthly payments, you need to know some things about garnishment, such as:

• How the garnishment process works and some built-in protections for you
• What types of property or funds can and can't be garnished
• Limitations on how much a creditor can garnish

How Garnishment Works

Generally, the garnishment process begins when you stop paying a creditor, and in response, the creditor goes to court and wins a case against you. The creditor then gets a "judgment" against you, which is a court order that details how much you owe and the interest rate you must pay on the unpaid amount.

Sometimes, the creditor gets another court order to make you appear at "supplemental proceedings," where you'll be required to answer detailed questions about your assets, wages, bank accounts, and other property.

Next, the creditor gets an order from the court to garnish your property. Before the creditor can actually take anything - either property or wages - the creditor must give notice of the garnishment. The notice must include:

• A clear statement that garnishment has occurred
• A description of the primary "exemptions" from garnishment, that is, what the creditor can't take
• A description of the procedures that you can follow to contest the garnishment; you will be given the chance to go to court and explain why garnishment should not be allowed

Finally, the creditor can take the judgment and garnishment order to the local sheriff and ask that the judgment be "levied" or "applied."

Generally, a creditor won't be interested in garnishment if you don't have anything that can be taken to pay the judgment, such as:

• A vehicle
• Regular wages
• Bank accounts

Vehicle garnishment can lead to repossession in some circumstances. But in many states, creditors aren't allowed to repossess and sell vehicles if the equity in the vehicle (the amount it's worth minus what's owed on it) is under a certain amount (around $2,000 or a little more in most states).

In many cases, a vehicle dealer takes a lien on the vehicle to secure payment. In these states, the lien laws, rather than garnishment laws, control the creditor-dealer's rights against you and the vehicle.

Wage garnishment is when the sheriff presents your employer with garnishment papers, ordering your employer to take out a certain amount each time you're paid, until the debt is paid off. The law requires your employer to withhold the correct amount from your paycheck or be legally liable for it.

Usually, a creditor will opt for wage garnishment if you're working steadily at more than the minimum hourly wage and don't already have other garnishments against your wages.

Limitations on Garnishments

Under federal law, the creditor can only take a specified amount from your paychecks, which is based upon a percentage of your "disposable earnings," that is, your pay minus required deductions, like state and federal taxes and Social Security withholdings.

Your income can't be garnished if it comes from:

• Social Security benefits
• Retirement plan benefits
• Public assistance benefits

And, unless the judgment is for child or spousal support, your income can't be garnished if it comes from:

• Workers' compensation awards
• Unemployment or disability benefits

Federal law gives you another protection: your employer can't fire you because of the inconvenience of having to cooperate with a garnishment for one debt. If your employer violates the law, punishment can include fines of up to $1,000 and imprisonment for up to one year. But, you can be fired for having more than one wage garnishment.

Finally, it usually doesn't matter if the funds or money that are normally exempt are deposited into a bank account, so long as the money remains readily available for your day-to-day needs. So, if you deposit your Social Security benefits into your checking account, they can't be garnished. But, if you put them into some type of permanent investment, then a creditor might be able to garnish them.

Child and Spousal Support

Many exempt funds can be garnished to pay child or spousal support. So, veterans' benefits, military retirement, most workers' compensation benefits, and Social Security old age, survivors' and disability benefits can all be garnished. Also, the percentage of your disposable income that can be garnished is higher for support than it is for other types of debt.

Garnishments in Bankruptcy

Filing for bankruptcy can stop a garnishment cold, through bankruptcy's automatic stay process. Bankruptcy allows you to receive your full paycheck, and possibly completely "discharge" (erase) the amount of the creditor's judgment against you.

Questions For Your Attorney