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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. 

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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