Income Artist

How Do Wage Garnishments Work?

Author: jack
Published:July 18, 2023
6 mins 39 secs

Taking loans always involves specific risks because returning the debt is often too complicated, and not everyone can cope with it. If you don’t repay your loan, you will likely face wage garnishment.

Is this process legal, and can lenders garnish wages without notification? Keep reading to get answers to all these questions!

What Is Paycheck Garnishment?

Wage garnishment is a legal procedure in which an employer gives a portion of the borrower’s paycheck to the lender to repay the debt. The garnishment amount depends on the specific state and debt type.

These factors impact the percentage of their weekly disposable income that can be taken and whether they can have multiple garnishments and pay court fees, interest, and administrative costs. 

When Can Lenders Garnish Your Wages?

A borrower can receive a “writ of garnishment” for various reasons. As a rule, they are related to mandatory payments like the following: 

  • Defaulted government student loans; 
  • Delinquent credit card loans;
  • Late child support payments; 
  • Unpaid taxes;
  • Other consumer debts. 

Short-term loans are often one of the main reasons why lenders garnish people’s wages.

These loans are often considered the best solution for covering unexpected expenses, but they have a limited repayment period.

Because payday loans garnish your wages, you should only apply for extra cash if you are confident about your ability to repay it. Additionally, it is advisable not to take out multiple loans simultaneously. 

In most states, people can get more than one garnishment at the same time, which can negatively affect their financial situation.

Therefore, several state laws try to protect the employee’s earnings by introducing restrictions such as reducing the maximum amount of wages garnished.

Types of Wage Garnishment 

Many borrowers face challenges when it comes to repaying their debts due to factors such as high-interest rates, inconvenient repayment terms, and hidden fees, which further complicate the debt repayment process.

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When borrowers fail to repay their debts, it can result in two types of garnishment being imposed.

Wage Garnishment

When a wage garnishment occurs, creditors contact your employer and require them to deduct a portion of your paycheck to repay your debts.

Non-Wage Garnishment

Non-Wage garnishment, commonly known as a bank levy, occurs when a creditor obtains a court order to withdraw money directly from the borrower’s bank account.

How Much Money Can Be Garnished From Your Paycheck? 

The United States has several federal and state laws aimed at protecting borrowers from excessive garnishing wages.

Federal Law

There are several federal limits on the wage garnishment amount that can vary depending on your debt type and the disposable income for a debt collector to seize.

Type of DebtTaken Percent of Weekly Disposable Income
Federal Student loans Up to 15% of disposable income.
Federal and state taxesWill be determined by the IRS (Internal Revenue Service) depending on the amount of your debt.
Consumer debts: medical bills, personal loans, credit cards, etc. From 25% of employee’s disposable earnings (the amount remaining after mandatory deductions);the amount by which employee’s weekly disposable earnings surpass 30 times the federal minimum wage ($7.25 an hour). 
Child support and alimony Up to 60% of disposable incomes, but the amount can be reduced if you support up to 50%. Note that if you postpone your payment for more than 12 weeks, you will be charged an extra 5%. 

Furthermore, federal laws protect debtors from being fired for a single garnishment. However, you lose this protection in the case of multiple wage garnishments. 

State Law

In addition to the federal limits, debtors may be protected by their state’s laws. For example, in Florida, you can have only one garnishment. And in South Carolina, consumer debt garnishment is entirely forbidden. 

What Do Employers Need To Do After Getting Court Orders?

After receiving a garnishment order from a court or government agency, such as an IRS levy, employers are required to take immediate action.

These entities typically initiate wage garnishment, which becomes the employer’s legal obligation to withhold a specified percentage from the debtor’s paycheck.

Notify The Employee 

If you, as an employer, receive the wage garnishment order, you first need to inform your employee about it.

Do it as soon as possible by sending a letter or using a particular form, such as Form 668, in the case of a federal levy. 

Update A Payroll Service 

To provide the ability to garnish wages to the creditor, an employer should contact the payroll departments of the garnishment or HR to update the employee’s payment details.

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This enables the employer to send money directly to the creditor. 

Stop Garnishing Employee’s Wages When It Is Needed

An employer needs to garnish an employee’s wages until receiving official notification to stop it or until the date specified in the court orders. 

paying debt

How To Deal With A Wage Garnishment Order?

Getting a wage garnishment order doesn’t always mean losing your funds. You can still save your income and deal with the court order.

Below, you can find our tips for effectively managing multiple wage garnishment orders.

Repay The Debt 

One of the options to consider for dealing with a wage garnishment order is to pay off a consumer debt.

Your wage will not be garnished if the debt collector receives the money. Taking out a loan is a common way to obtain extra cash.

However, it often leads to entering a debt cycle, so it is always advisable to try to manage your debt independently. For example, you can borrow funds from your family or friends to repay the debt.

Negotiate with Your Lender

Negotiating with your lender can stop the wage garnishment process in several cases. Show your creditor you are interested in repaying the debt.

For example, you can offer a payment plan that allows you to return the funds in smaller monthly amounts. 

Another alternative is to discuss paying off less of your debt. If the lender approves such an option, you will need to return the debt in one lump sum.

If it is too difficult for you, you can also ask for help from a debt settlement company, but consider all risks to your credit score it can cause. 

Challenge The Wage Garnishment in Court 

After receiving a garnishment notice, you can still challenge the court order. Filing a claim of exemption can reduce or even stop your wage garnishment.

You need to prove that your income is exempt from wage garnishments. For instance, if you get an income from retirement, alimony, Social Security, or child support. 

Ask for Help From a Nonprofit 

Many people regularly meet financial difficulties, so various nonprofit financial organizations appear.

You can ask for a free credit counseling section to get recommendations for your case and even get assistance in making a repayment plan. 

File Bankruptcy 

Filing for bankruptcy is an extreme measure, but it can be your only option to stop wage garnishment. It can protect you from creditors’ calls and stop debt collection activities. 

While filing for bankruptcy can be a solution, it is not suitable for everyone. It should be considered only as a last resort.

It is crucial to thoroughly understand the advantages and disadvantages of filing for bankruptcy before making a decision.


How Can I Stop Garnishment Of My Paycheck?

To stop wage garnishment, you should repay your debt. If it is impossible, you can negotiate with your lender, make a repayment plan, file for bankruptcy, or prove that your income is from child support or other exemptions. 

Can An Employer Refuse To Garnish Wages?

Employers cannot refuse wage garnishment since it is a legal process. Failure to comply can result in penalties or even make the employer responsible for the employee’s judgment.

How Much Can A Creditor Garnish?

Creditors are limited to garnishing no more than 25% of your weekly disposable income or 30 times the federal minimum wage.