How Long Before a Creditor Can Garnish Wages?

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Have you gotten yourself into a bad financial situation and started wondering how long you have before a creditor can garnish your wages? The answer can be a bit complicated, but in most cases, you don’t need to worry about wage garnishment until your debt has been delinquent for several months.

If you’re in this situation, then you should also know that the wage garnishment process itself can also take multiple weeks, depending on specific circumstances. Keep reading to find out more about wage garnishment.

Understanding Wage Garnishment

Wage garnishment is a legal procedure during which an individual’s earnings are required, by court order, to be withheld by the employer for the purpose of debt repayment.

There are two types of garnishment: wage and nonwage.

  • Wage garnishment means that your employer is legally required to withhold a specific amount of earnings as a result of the court order which is often called a “Notice of Garnishment.”
  • Nonwage garnishment (also known as a bank levy) is when a creditor contacts your bank and accesses funds directly from your bank account.

Typically, wage garnishment happens in one of two ways:

  1. A creditor sues you for nonpayment and wins via judgment.
  2. A state or federal agency initiates a garnishment in cases like  child support, back taxes and federal student loans.

Wage garnishment will continue until the debt is paid off or otherwise resolved. Some states have time limitations for how many years a creditor may garnish wages. Additionally, wage garnishment will be halted if you lose employment.

The total amount subject to garnishment can often include court fees and any interest accrued.

The court will notify you of the impending wage garnishment. Additionally, the court will send a notice either to your bank or your employer. Wage garnishment typically starts within five to 30 days after approval. The exact time will vary depending on the creditor and the state.

How Much of Your Paycheck Can Be Garnished?

There are federal limitations on how much of your paycheck can be garnished, depending on your income level and the type of debt that is owed.

There are also individual state laws about wage garnishment that vary. State laws may often have additional protections, including factors like being the head of a household with dependent children.

Judgments

If you lose a lawsuit and a judgment is entered against you, the creditor or person who won the suit can garnish your wages up to whichever is the lower of these two amounts:

  • 25 percent of your disposable earnings
  •  Any amount greater than 30 times the federal minimum wage (which is currently $7.25)

Note that your employer must notify you about a wage garnishment before it begins, and your employer has to provide you with information on how you can request a hearing about the wage garnishment.

Child Support and Alimony

Child support and alimony are the two types of debt with the most considerable potential for wage garnishment. According to federal law, you can have up to 60 percent of your income garnished. If you’re supporting another child or spouse, the maximum is lowered to 50 percent. Additionally, if you’re more than 12 weeks late on payments, an additional five percent can be taken.

Student Loans

The US Department of Education or any agency collecting on its behalf can garnish up to 15 percent of your pay. This can only occur if you’re in default on your student loan. Student loans are different as they don’t require a lawsuit to proceed with wage garnishment. As soon as your student loans are in default, there’s potential for garnishment.

However, you need to be notified in writing at least 30 days before the wage garnishment is set to begin. The notice needs to include several important details, such as:

  • The total amount you owe;
  • How to get a copy of records related to your loan;
  • How to enter into a voluntary repayment schedule; and
  • How to request a hearing on the proposed wage garnishment.

Taxes

Back taxes is another situation where a court order isn’t necessary. If you owe back taxes to the IRS, they can usually take up to 15 percent. In reality, they will take into consideration several factors before deciding on how much to garnish. The IRS will look at how many dependents you have and your standard deduction amount.

The IRS will notify your employer with a wage levy notice. Your employer will then give you a copy. This notice includes an exemption claim form, which you may want to complete.

State and local tax agencies also have the right to take some of your wages. However, there will be limitations in place on how much they can take, depending on the state.

Exempt Income

Every state has certain types of income that are protected from wage garnishment. Depending on your situation and your income stream, you may be able to protect some or all of your wages.

Generally speaking, the types of exempt income are:

  • Social Security;
  • Disability;
  • Veterans’ benefits;
  • Pension and retirement benefits;
  • Child support; and
  • Alimony.

Additionally, low-income earners who have little or no disposable income may be allowed to keep their wages.

Can You Be Fired for Having Your Wages Garnished?

You cannot be fired or retaliated against in any way by an employer because your wages have been garnished. However, this protection is removed if you have more than one wage garnishment in place. Under federal law, you’re only protected when one creditor is garnishing your wages.

Some states offer more protection, but it’s essential to determine what the protection is in your state. If you have more than one wage garnishment against you, it’s important to talk to your employer and explain your plan of action to rectify the situation.

Can You Protest a Wage Garnishment?

There are several ways to seek relief from a garnishment; however, the best way would be to address the situation prior to a creditor obtaining a judgment against you, either by hiring legal counsel or representing yourself.

Additionally, note that when you receive a notice of garnishment, you may still be ableto work out a deal with your creditors. For example, your federal student loan creditor may offer you the opportunity to opt into a voluntary repayment plan rather than proceed with wage garnishment.

Claim of Exemption

If your income is coming from a source categorized as exempt, you may need to act quickly. Monthly income or savings collected from an exempt income source cannot be garnished. However, you will need to submit a claim of exemption to stop the wage garnishment.

Before your paycheck is garnished for the first time, your employer will give you a notice. The notice includes instructions for filing a claim of exemption. The notice will have an address with the appropriate clerk’s office where you will need to file the claim.

The cost of filing a claim of exemption is minimal but may be extremely beneficial. If approved, it can substantially reduce the amount of your garnishment. You’ll have a hearing in which you can list your living expenses and show any attempts you’ve made to handle the debt without garnishment.

Note that it can take one to two months to schedule a hearing, so you’ll want to file the claim as soon as you receive the wage garnishment notice.

Does Wage Garnishment Affect Your Credit?

The wage garnishment won’t appear as a negative item on your credit reports, but it could be notated on the account in question. While the garnishment itself won’t hurt your score, being late on payments will.

Luckily, you can still take action to improve your credit during and after a wage garnishment. Start by working with a credit repair service, like Lexington Law, to get a good understanding of what condition your credit is in and if anything can be done to help it today.


Reviewed by Kenton Arbon, an Associate Attorney at Lexington Law Firm. Written by Lexington Law.

Kenton Arbon is an Associate Attorney in the Arizona office. Mr. Arbon was born in Bakersfield, California, and grew up in the Northwest. He earned his B.A. in Business Administration, Human Resources Management, while working as an Oregon State Trooper. His interest in the law lead him to relocate to Arizona, attend law school, and graduate from Arizona State College of Law in 2017. Since graduating from law school, Mr. Arbon has worked in multiple compliance domains including anti-money laundering, Medicare Part D, contracts, and debt negotiation. Mr. Arbon is licensed to practice law in Arizona. He is located in the Phoenix office.

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