Many debtors that have defaulted on their credit card debt or other unsecured loans are concerned about their wages being garnished. Often collection agencies will threaten to turn your debt over to their ‘legal department’, or take you to civil court to get a judgment, or garnish your wages. Well what can they really do and how much of your wages can they actually garnish? Relax… I found this very important information for you… at no charge.
The U.S. Department of Labor has developed The Federal Wage Garnishment Law, Consumer Credit Protection Act’s Title 3 (CCPA) - which defines how much of a person wages can be garnished by debt collectors via a judgment. The best way to overcome your defaulted debt is to gain knowledge. The more you know about what can happen in the ‘real world’ (not the world of phone calls with debt collectors and their often empty threats) the more likely you’ll be able to get out of debt, salvage your credit report, and get on with a happy life.
If you need immediate advice on bankruptcy or debt settlement, then please call 877-231-4384. This is a toll-free number. A representative will help evaluate your financial problems for free and can even connect you with a local attorney. You can also fill out our free bankruptcy evaluation form by clicking here.
Here’s what you need to know from the above mentioned Act
What are the restrictions on wage garnishment?
The amount of pay subject to garnishment is based on an employee’s “disposable earnings,” which is the amount left after legally required deductions are made. Examples of such deductions include federal, state, and local taxes, the employee’s share of State Unemployment Insurance and Social Security. It also includes withholdings for employee retirement systems required by law.
Deductions not required by law—such as those for voluntary wage assignments, union dues, health and life insurance, contributions to charitable causes, purchases of savings bonds, retirement plan contributions (except those required by law) and payments to employers for payroll advances or purchases of merchandise—usually may not be subtracted from gross earnings when calculating disposable earnings under the CCPA.
The law sets the maximum amount that may be garnished in any workweek or pay period, regardless of the number of garnishment orders received by the employer. For ordinary garnishments (i.e., those not for support, bankruptcy, or any state or federal tax), the weekly amount may not exceed the lesser of two figures: 25 percent of the employee’s disposable earnings, or the amount by which an employee’s disposable earnings are greater than 30 times the federal minimum wage (currently $6.55 an hour).
For illustration, if the pay period is weekly and disposable earnings are $196.50 ($6.55 × 30) or less, there can be no garnishment. If disposable earnings are more than $196.50 but less than $262.00 ($6.55 × 40), the amount above $196.50 can be garnished. A maximum of 25 percent can be garnished, if disposable income earnings are $262.00 or more. When pay periods cover more than one week, multiples of the weekly restrictions must be used to calculate the maximum amounts that may be garnished. The table and examples at the end of this fact sheet illustrate these amounts.
What about child support and alimony?
Specific restrictions apply to court orders for child support or alimony. The garnishment law allows up to 50 percent of a worker’s disposable earnings to be garnished for these purposes if the worker is supporting another spouse or child, or up to 60 percent if the worker is not. An additional 5 percent may be garnished for support payments more than l2 weeks in arrears.
Are there any exceptions to the law?
The wage garnishment law specifies that the garnishment restrictions do not apply to certain bankruptcy court orders, or to debts due for federal or state taxes.
If a state wage garnishment law differs from the CCPA, the law resulting in the smaller garnishment must be observed.
The world of defaulted debt is no different from any other aspect of our lives. The more information and truth you acquire on the subject… the sooner you’ll be able to escape from Debt Prison. If you are new to the world of defaulted debt please take the time to read my best articles listed below.
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Hi, here’s my case…I owe close to 18 grand in credit card debt…I have no job or career skills and have currently been unemployed for about 6 months…besides that, I have nothing on the horizon, have applied for various jobs and have undergone various interviews without any success whatsoever…since the first bill I have been giving the minimum payments towards all my creditcards every month without delay for several years…however, over that period of time the initial interest rate has been jacked up to nearly twice the amount…nevertheless, I have continued to use the credit cards one at a time to make daily purchases such as gasoline for my car and meals and ocassionally clothing or home appliances while I continue to give the monthly minimum payments in hopes of soon finding a job and try to stabilize my financial situation…unfortunately, my bank account is almost empty and I have not been able to find a job to replenish it, nore does it seem that I will find one soon from the looks of it…I am currently assisted with shelter and partial nourishment by my mother who is also struggling to make ends meet while I attempt to find a job…I only have 2 assets at the moment which I’d like to know if they could be confiscated if I were to file for bancruptcy…I own a car worth under 2 grand which I bought and registered in another state and which is my only means of transportation…I am also the partial owner of my mother’s house which is under mine and 3 other siblings’ names…is there a posibility that the collections agencies or the sheriff can can pursue these assets if I can’t continue paying due to the innability to find work?
I see a letter putting on top of the public mail box 1 week ago and have no specific apt. number on it, the collecting agency sent me that letter and bill for over $118,000. After Bank of America foreclosure my condo 2 years ago when i failed to pay the monthly payment and I had gone back to H.K. to live for 2 years.( I just returned United states 1 year ago as my wife’s father passed away.) I have a line of credit with the same bank, as I remember the 2 loans altogether should be under $160,000. and the market value of the condo at that time is about $190,000 I don’t want to bother and I don’t want to respond to that letter because I don’t remember exactly how much I owe. I have no money and no assets, I and my wife had no job, I am taking only $701 disability benefits monthly, that is for me and my wife to spend. (she is taking care of me and also had no job, she is 58 and is sick right now,and I am 64 years old and is retired. ), right now I am living at Oakland low income senior housing.
Can I just ignore the letter? Please give me advice. Thank you very much for your attention.
To Chuckeroo,
Just wanted to let you know that under the Debt Collections Improvement Act of 1996 the Federal goverment is allowed to garnish up to 25% of a any type of federal monies, including, SSI, SSD, Fed. Pensions, VA..etc. If you recieve money from the govement is is garnishable so long as you are left with at least $750 (per month). As for state laws such as hospital bills the collections agency was right as you live in what is called a “DEBTOR STATE” and the they cant touch her SSI they can though get a default judgment and seize your bank account and it would be your problem to get it back from them (i.e. you have to hire your own atty). Hope this helps answer your questions on what can and can not be taken.
Administratve Wage Garnishment Manager =)
Florida, I’m on SSD and have a small state retirement. I had open heart surgery last year. Tons of bills even after Insurance Payments. Lost insurance when I couldn’t go back to work. Been paying small amounts to all bills. 1 collection agency took me to court but had no info on the bill. Judge give them another hearing next month. I was told if they get a judgement they cannot touch my SSD or retirment. Then I was told they wait till I deposit them in my checking and hit my checking account. Then I have to hire an attorney to get the money back. Is this true? I am hoping they cannot verify the bill but if they can I want to head them off.
Also has anyone used the laws for exploitation of the elderly on these collection agencies?
I’m retired lawenforcement and don’t scare easily but what about the elderly?
Question – While I know my Social Security Disability income is exempt from garnishment/attachment, does the same hold true for my Long-Term Disability benefit (premiums of which I paid out of my paycheck). I live in Massachusetts (where the suit on a credit card default was filed), but the checks are issued out of Pennsylvania. I do not deposit the LTD checks. I cash them. As such, there is no evidence via my bank account that I receive the LTD benefit.
Jason,
Your Social Security payments are not eligible for garnishment. Always feel free to talk with a local lawyer though to get a good experienced opinion. Judges don’t always follow the law.
Barry
What if I’m receiving Social Security benefit as my primary income. I only bring home $710.00 a month and that is my only income. Am I still liable for garnishment or sue in the court?
Hey Shannon,
I haven’t looked into this at all. This is the first I’ve heard of it. But I will spend some time and investigate.
If I am not mistaken, there are certain types of occupations that wages from cannot be garnished under protection of federal law. One would be a merchant seaman’s wages as protected under the Jones Act. Wages from this job may only be garnished for child support & IRS. Please give me your feed back on this at your convenience. Thanks!