A garnishment is court-ordered and allows a creditor to collect the debt he is owed. A wage assignment may also be court-ordered, but it can be voluntary or mandatory until the delinquency or debt has been paid in full to the creditor.
The purpose of a garnishment is to recover funds owed to a creditor. The creditor may have the funds garnisheed from a bank account, paycheck, or from other assets.
The wage assignment allows a creditor to a retain of portion of the debtor's paycheck once a delinquency has occurred. There are two types: mandatory and voluntary.
Voluntary Wage Assignment
A voluntary wage assignment occurs when a person agrees to the transfer of future funds, usually through a paycheck, to cover a delinquency.
Mandatory Wage Assignment
A mandatory wage assignment occurs through a court order. Money will then be deducted from a person’s earnings until the debt has been paid.
A creditor may only garnishee a certain percentage of a debtor’s paycheck, depending on the state's law (in the state of Washington, for example, the limit is 25 percent). When dealing with a wage assignment, the creditor can generally acquire a larger percentage of a person’s earnings.