You are working, but your wages just don’t cover all of your expenses. You have a hefty student loan, and you go into default on it. One day, you open your mailbox and discover a letter from the U.S. Department of Education. You are being notified that your paycheck will be garnished to cover your debt.
Garnishment is a legal procedure that creditors use to collect debts. It typically occurs when an account is six months past due, and the debtor has not arranged repayment.
A garnishment order is usually needed, but government agencies can garnish wages without one. The IRS and the U.S. Department of Education are two examples. Child support and alimony can also be collected via garnishment if the court orders it.
Are you up against garnishment, but asking “What does garnishment of wages mean?” Read this article to find out more about it.
What Does Garnishment of Wages Mean?
To garnish is to take property (often wages) through legal means. The process of garnishment involves a creditor (either a person or an entity) satisfying a debt by seizing the property or assets of a debtor.
There are two different types of garnishment: wage and non-wage. In wage garnishment, the employer is notified and sets aside a portion of your paycheck for the creditor. In non-wage garnishment, the money is directly drafted from your bank account without your employer’s knowledge.
It is important to understand administrative offset, which means that by law, a federal agency can withhold 15% of a debtor’s wages without a court order.
Various types of debt are eligible for garnishment. Some of the leading ones include child support, tax debts, consumer debt, and student loan debt. Income can be used to satisfy the debt, but other revenue sources, such as Social Security benefits and tax refunds can be garnished too.
Here are some of the ways common debts are handled during garnishment:
- Student Loans: Loan payments can be deferred for repayment if the creditor is notified. This can allow most people to avoid garnishment. Deferment and forbearance suspend loan payments anywhere from a few months to years. If a person falls too far behind, however, the creditor can garnish up to 15% of their disposable earnings.
- Unpaid Income Taxes: If back taxes are owed, the IRS can garnish your paycheck without a court order. The amount taken is contingent on the number of dependents you have and standard deductions claimed. Local tax agencies and the state can also garnish wages, but the law does limit the amount they can take.
- Alimony and Child Support: If court-ordered child support or alimony payments go unpaid, an automatic wage withholding order will go into effect. The limits for wage garnishment are higher for child support than they are for other debts. By law, an employee cannot be fired, disciplined, or retaliated against if their wages are garnished for child support.
Tips for Fighting Wage Garnishment
If you are facing garnishment, there are steps you can take to avoid it and try to satisfy the debts on your own.
First, you should contact your creditors and collections agencies and obtain proof of the amount you owe. Next, you should make sure to attend all court summons to avoid judgments. Finally, explore the ways you can avoid wage garnishment and consolidate your debt.
A qualified attorney who is well-versed in wage garnishment can also help guide you through the process. What does garnishment of wages mean when it comes to your credit standing? Be sure to check out more of our legal articles and check out our resources tab to find a bankruptcy attorney and debt collection for answers to this question.