There are a lot of different policies that the government makes in order for the people to clear their debts. Among these different policies, one is related to your wages, and this is called wage garnishment. In this, the employer withholds a specific part of the wage and then sends it directly to the credit to whom you own money.

If you are someone who wants to know what wage garnishment is, how it works, and what happens because of it, then this article has everything you need to know. So, let's jump right into this article and have a look at all of the intricacies of this concept.

What is Wage Garnishment?

The first question that comes to your mind is what is wage garnishment. This is a way through which the companies collect their debt from the employer that requires a court order. If the court says to collect the garnish from the employees, then the company will start deducting some amount of your salary directly from your paycheck, and then they will pay the money to the creditors to pay the debts.

There are a lot of different reasons for which the ages can be garnished. This can be done for delinquent loans, of credit card bills, debt, and even unpaid taxes.

One example that will help you understand more about this is if you are in a credit card debt and you are using wage garnishment to pay off the debt. This is a legal contract that needs to have a proper legal procedure to be don’t. This legal procedure will keep going until and unless your debts are not settled.

Who Can Garnish Wages?

Now, you might be thinking, who can garnish your wages? Any private creditor can seek the garnishment of the wages. This means that credit card companies, mortgage companies, banks, debt collections, student loan servicers, and other agencies can be applicable for the garnishment of wages. You can even use this procedure to pay the unpaid tax debt.

The garnishment of wages is a painful and unpleasant experience that can cause a lot of problems. This is because a considerable amount of the money you are earning will go to paying the debt. However, with the help of this method, you will be paying off your money and clearing the debt, but still adjusting to such a massive amount of money being cut from your paycheck can be a huge pain.

How Much of the Wages Can be Used for Garnishment?

The next thing you need to understand is how much money can be garnished. The Consumer Financial Protection Act limits the amount that can be used for the garnishment of the debt. However, it depends on the salary you are earning and also on the type of debt you have.

When it comes to debt for private credit card companies, the garnishment of wages is limited to 25%. For example, you earn $1000 every month. However, you owe a debt, and every month, 25% of the money is deducted, which means $250 will go to the credit card company, and the remaining amount you can take with you at home will go into your wallet.

Other than this, if you are someone who owes the federal then the minimum wage is about $7.25 per hour. Therefore, if you are earning about $217 or less, then this means that you cannot garnish your wages. However, if you are earning more than $217, then you can garnish the earnings. Here, the amount of wage that can be garnished is about 25%.

If you are in debt of alimony and child support, then the garnishment is a little higher. Here, you need to pay about 50% to 65% of your income. If you're on a student loan, then you need to pay about 15% of your income. Furthermore, you need to know that the state government has its own rules and limit for the garnishment of wages.

Different Ways to Prevent the Garnishment:

Not everyone wants the garnishment of their wages; if you are someone who wants to prevent this from happening, then the following are some ways through which you can avoid this.

Settle the Debt:

The first and foremost thing you can do is settle the debts. Here, you can even negotiate the terms and make them accept less than you owe. However, you need to know that the creditor is under no obligation. He can accept your terms, and he can reject the terms you are proposing to them. However, this is an excellent option to settle the debt in advance.

Challenge the Garnishment:

When the court gives you the notice of garnishment, then there will also be a message through which you can easily challenge the garnishment. There will also be instructions through which you can challenge it.

Review State Exemptions:

There are different exemptions that you can do when it comes to garnishment. Things like social security, child support, and retirement income can all be exempt from garnishment.

File for Bankruptcy:

If you file for bankruptcy, then this means that you can stop garnishment of the way. When you start the filing process, you will be protected automatically, and there will be a stay that will prevent creditors from getting the debts.

Conclusion:

The garnishment of wages is something that comes from the court order. This happens when you are in debt and you are not paying the debt. However, this is something that can cause a lot of issues for the person whose wage is garnished. We hope this article was beneficial for you in learning about the garnishment of wages and the things you can do to protect yourself from this issue.