Federal and state laws help to establish which garnishment order should be given priority in case a debtor has multiple garnishments ordered against him.
The Federal Consumer Credit Protection Act limits a garnishment for consumer debts to 25 percent of an employee's disposable earnings or the amount that exceeds 30 times the federal minimum wage, whichever is less. However, this act does not set rules regarding the priority of garnishments. Instead, other federal and state laws determine the priority of garnishments pertaining to certain debts.
According to the Federal Bankruptcy Act, bankruptcy orders take priority over any other type of wage garnishment. These orders often include provisions regarding child support.
A common trend is for states to establish that support orders, such as child support or alimony, take priority over other debts. Minnesota, for example, structures garnishments this way. The prioritization generally holds true even if another garnishment order was already in place when the employer receives a new garnishment order for support. If there is any money remaining after funds are taken for the child support garnishment order, the other garnishment can be paid up to the federal limit.
Current support orders are usually given priority over support orders for accounts in arrears. If an employee's disposable wages cannot pay for each support obligation against him, the orders are sometimes paid in proportional amounts toward the several garnishment orders, as Missouri demonstrates.
Next in priority is usually a tax levy to the Internal Revenue Service. If a federal tax levy was already in place before a garnishment for support was ordered, the federal tax levy usually has priority over the support order.
States also may establish that debts for taxes due to the state take priority over other types of debts.
Some states, such as Washington, include a provision that administrative garnishments are treated the same as other types of non-support garnishments. However, other states may give priority to other debts, such as student loans or other debt owed to the state government.
Timing of Debt
For all other types of debt, the garnishment that has priority usually is the one received by the employer first. The first garnishment must generally be satisfied in full before the next garnishment becomes effective. The creditor may have to file a new garnishment order if the first was invalid due to priority considerations.