Wage Garnishment

A wage garnishment is a way to collect money owed to you by a debtor. If your debtor has a regular paying job, then you may be able to garnish up to 25% of his wages. Under wage garnishment, the employer of the debtor is informed about the wage garnishment and a certain portion of the debtor’s wages are withheld from each paycheck by the employer and handed over to the creditor.

How it Works

You have to sue the debtor (whose wage you want to garnish) in a civil court. If the judgment rules in your favor, then you simply give the sheriff or other local official (called the "levying officer") the details of the debtor and about his workplace. The levying officer will collect the money from the employer of the debtor and give it to you. This payment continues till the debt has been paid in full or you make alternate arrangements with the debtor for collecting the money owed to you.

Limitations to Wage Garnishment

• Under federal law, wage garnishment cannot be done for more than 25% of the debtor's net earnings (gross income less deductions). This is the maximum amount but there is a minimum stipulation as well. Thirty times of the minimum wage (which equals about $150) cannot be used for wage garnishment and is considered exempt. So whatever the debtor earns in excess of $150, 25% of that figure can be used as wage garnishment.
• You cannot garnish the wages of a person who is already under a previous wage garnishment, unless such garnishment is under 25% of the wages.
• Other exemptions are cash welfare benefits, supplemental security income (SSI), social security benefits, unemployment payment, student loans, grant or work payments, pension and retirement incomes.

IRS Wage Garnishment

The Internal Revenue Service can garnish your wages as a collection of debt owed to them if you are a defaulting taxpayer. The state and IRS often employ wage garnishments to collect taxes owed through your employer. An IRS wage garnishment necessitates a large percentage of the taxpayer's wages to be handed over directly to them. The wage garnishment continues until the tax arrears are cleared or until the IRS agrees to discharge the garnishment.

How much the IRS can collect through wage garnishment depends on the taxpayer’s marital status and number of dependents. But essentially this means most of your salary, with only about $116 per week being exempt. This amount is calculated as a sum of the standard deduction you can claim on your taxes and the amount you can claim for exemptions, divided by 52. Thus typically, a family of three people under an IRS wage garnishment will only be permitted an allowance of around $350 per week.

How to Stop Wage Garnishment

Wage garnishment can be a very trying time for a taxpayer, especially one who has a family and they depend on the paycheck for their survival. If you have a wage garnishment against you, you can take the following steps to avoid it.

• When you receive the withholding order informing you of the wage garnishment, you can file an exemption claim to show that you need the money for your living expenses or that you are making alternate arrangements for repaying the debt. This may stop the wage garnishment or at least give you enough time to pay your debts.
• In case of an IRS wage garnishment, you can obtain the services of a competent tax attorney who can deal with the IRS on your behalf and release the wage garnishment, or at least lower it. But you will have to agree to pay your debt through some other mutually reached upon agreement.