Table of Contents:
- About Missouri Wage Garnishment Laws
- New Jersey Wage Garnishment Rules
- Wage Garnishment Laws in Illinois
- Arizona Garnishment Laws
- Rules for Wage Garnishment in Iowa
- Nebraska Garnishment Law
- California Laws on Wage Garnishment
- New York State Wage Garnishment Laws
- Garnishment Laws in Virginia
- Pennsylvania Wage Garnishment Laws
Missouri State Law
According to Missouri state statutes, a creditor can take the lesser of 25 percent of wages, 10 percent if the debtor is the head of a family and a Missouri resident, or the amount that is above 30 times the federal minimum hourly wage.
Currently, the federal minimum wage is $6.55 per hour. Effective July 24, 2009, that rate will increase to $7.25. Missouri state minimum wage is $7.05. Garnishments are based on the federal rate.
In Missouri, deductions for child support may be as high as 50 percent, depending on how much is owed. Child support garnishments take priority over any other garnishments, unless the Internal Revenue Service has a preexisting wage levy.
Federal law prohibits all employers from terminating employees solely based on wage garnishments, no matter the reason for garnishment. Violation of this may result in a monetary fine and/or imprisonment.
While garnishment may help pay a debt, creditors should keep in mind that sometimes debtors will choose to quit working or file bankruptcy. However, IRS and child support debts are not bankruptcy-dischargeable.
Process of Garnishment
Garnishment in New Jersey typically requires a creditor to get a judgment against the debtor first. The creditor then submits an application to the court with supporting documents that show the amount of the judgment and information on the debtor’s employer, requesting the court to order the debtor’s employer to withhold wages to satisfy the judgment. The creditor is required to serve notice of the application on the debtor and file a form with the court to show how the person was served.
New Jersey uses more lenient garnishment standards for lower-income debtors than the applicable federal law. That's good news for debtors, since the state or federal law that results in the lower garnishment amount is the law that applies. Creditors can take up to 10 percent of a debtor’s gross income if he earns no more than 250 percent of the federal poverty level, based on the household size. If he earns more than this amount, the creditor can take up to 25 percent of the debtor’s disposable earnings. Disposable earnings refer to the wages that remain after taxes and payments to Social Security.
The federal law also uses the 25-percent figure. However, another calculation also must be made under federal law. If the debtor’s disposable earnings minus 30 times the federal minimum wage is less than 25 percent of the disposable earnings, this calculation must be used instead. For example, if an employee had disposable wages of $250 and the federal minimum wage was $7.25 an hour, the employee could only have $33.50 garnished as represented in the calculation: $250 - ($7.25 * 30) = $33.50. Using the 25-percent calculation would have resulted in $62.50. The lower figure must be used.
Using the state rules, in 2015 the federal poverty level for a family of four was $24,250, or a weekly income of $466. If the debtor earned $350 for the week, the creditor could garnish wages for $35 that week. However, if the person earned $2,000 for the week and the debtor had $1,500 of disposable wages, the creditor could garnish up to $375 of the debtor's wages. Based on the federal rules, if the debtor had disposable earnings of $290 and gross income or $350, the creditor in theory could garnish $72.50. However, since $72.50 is more than $35, the state law would be applied.
Certain debts do not follow the same process or limits listed above. For example, child support, student loans or tax debts can cause an employee’s wages to be garnished without the need for a court judgment. Child support debt can result in 65 percent of an employee’s wages being deducted if he has no other dependents and is in arrears by at least 12 weeks. Defaulted student loans can lead to 15 percent of an employee’s disposable wages being garnished. The amount of a garnishment for tax debt depends on how many dependents a person has, as well as his deduction rate.
In order for a creditor to garnish an employee's wages, the employee must have income that is greater than 45 times the Illinois minimum wage or the federal minimum wage, whichever is greater. In 2015, the federal minimum wage was set at $7.25 per hour while the Illinois minimum wage was $8.25 per hour. Therefore, an employee must have earned more than $371.25 ($8.25 * 45) in weekly net pay before his wages could be garnished in 2015.
Provided that the employee meets the minimum income threshold, the amount that can be garnished is equal to 15 percent of the employee's gross wages or the amount of the employee's net wages that exceed the minimum income noted above, whichever is lower. Therefore, if the employee had a gross income of $500 and a net income of $400, 15 percent of her gross income would be $75. The difference in the net income and the exempted amount would be $28.75 ($400 - $371.25). Therefore, the creditor could only take the $28.75 each week, because that is the lesser calculation.
In any case, the maximum amount of wages that can be deducted is either 15 percent of gross wages or the difference between 45 times the federal or state minimum wage and the amount of net pay, whichever is lower. For child support garnishments, the employer can withhold up to 65 percent of the net wages if the employee has no other dependents and is over 12 weeks in arrears.
If a second creditor wishes to garnish an employee's paycheck, it cannot do so until the existing garnishment is paid off. Additionally, an employee's wages cannot be garnished if they are subject to an existing court order for child support.
The garnishment should stop when the debt has been fully repaid. The garnishment can expire, but the creditor can go back and renew it if necessary. Filing Chapter 7 or Chapter 13 bankruptcy will create a stay on the garnishment.
Under Arizona law, a creditor may bring a garnishment action against a debtor who is delinquent on his loan or is ordered by the court to pay child support or alimony. Once the creditor obtains a money judgment against the debtor to collect or a court order for support is made, the party entitled to the money can collect it from third-party sources such as the debtor's employer or bank.
Garnishing Wages and Property
A creditor can collect a portion of an employee's wages once the court has awarded a money judgment or issued a support order under Arizona law. Additionally, creditors are also allowed to garnish other money or property belonging to the debtor with some exceptions. The maximum amount of an employee's wages that can be garnished is 25 percent. Similarly, creditors cannot garnish professional tools, VA benefits or Supplemental Security Income (SSI). Further, when creditors garnish money in a bank account, they must leave a minimum of $150.00.
In Arizona, filing for bankruptcy halts the collection efforts of garnishments. Under U.S. law, once bankruptcy has been filed, creditors are prohibited from making any efforts to collect outstanding money owed until the stay is lifted by the bankruptcy court.
After a creditor receives a judgment against a debtor, it can file an application for a writ of garnishment with the court that gave the judgment. The creditor specifies the type of property that it wants garnished, such as wages, and supplies information about who is in control of the property. The application must be submitted with the application fee due for the writ. After that, the writ is served on the employer and the defendant.
Iowa allows a creditor to take a maximum of 25 percent of a debtor's disposable wages for the week or the amount over 40 times the federal minimum wage, whichever is less. For example, if the debtor had disposable wages of $350, 25 percent of this amount would be $87.50. The amount that exceeds 40 times the federal minimum wage of $7.25 would be $60, so the creditor could take a maximum of $60.
In addition to the general formula, Iowa caps the amount for how much any particular creditor can garnish within a year. This is based on how much an individual earns. For example, for an employee with an annual income of $11,999 or less, up to $250 can be garnished. Employees with annual incomes between $12,000 and $15,999 can have their wages garnished by up to $400. For incomes between $16,000 and $23,999, a maximum garnishment amount of $800 is permitted. The maximum garnishment amount for the year for incomes up to $34,999 is $1,500 and the maximum annual garnishment amount for individuals with an annual income of up to $49,999 is $2,000. For individuals with annual incomes of $50,000 or more, up to 10 percent of expected earnings can be garnished.
Child Support Debt
Iowa's process is different for child support debt. The Child Support Recovery Unit sends a separate order to the employer that instructs it to withhold a specific amount for child support. It also sends the order to the debtor. Employers are instructed to withhold payments directly from the employee's income immediately. Parents do not have to be behind on child support in order for the order to be issued or effective. After an employer receives this order, it has ten days to process the paperwork and must then withhold funds from the next paycheck.
Nebraska's garnishment law permits a creditor, including a judgment creditor, the ability to seize the property of a debtor to satisfy a debt or judgment. A garnishment order directs a third party such as a bank or an employer to withhold money on behalf of the creditor. The entity withholding money pays it to the court clerk for the ultimate benefit of the creditor.
Different types of garnishments are permissible under Nebraska law. The most commonly utilized variations include bank and wage garnishments. Both of these garnishments require a specific order from the court directing that either the bank or an employer withhold a certain amount of a debtor's money on deposit or wages.
The benefits of the garnishment process in Nebraska rests in the fact that it provides a creditor an effective tool to satisfy a debt or judgment when the debtor or defendant refuses to resolve the obligation on a voluntary basis.
A debtor in Nebraska who files for bankruptcy benefits from what is known as an order of automatic stay. According to the U.S. Bankruptcy Code, an order of automatic stay requires a creditor to stop all collection activity immediately until further order of the bankruptcy court. Pursuant to Nebraska garnishment law, the garnishment terminates upon the debtor's filing of a bankruptcy
Whether you are a creditor or a debtor, to ensure your rights and interests are protected throughout a garnishment process, consider engaging the services of an experienced collection lawyer. The Nebraska State Bar Association maintains a directory of attorneys in different practice areas, including collection law.
Nebraska State Bar Association 635 S. 14th St., Suite 200 Lincoln, NE 68508 402-475-7091 nebar.com
Once a creditor receives a judgment against a debtor, it can use the garnishment process to attempt to have the debtor's employer withhold the non-exempt portion of a debtor's disposable earnings. In California, a creditor can garnish an employee's wages for consumer debt, defaulted student loans, tax debt and support obligations.
Process of Garnishment
The creditor completes an Application for Earnings Withholding Order, otherwise known as a wage garnishment, that details the debt owed, the type of debt and the judgment that has been rendered. California provides a standard form for this purpose. The creditor must provide the name and address of the employer on this form. The Earnings Withholding Order then is served on the California employer, along with instructions regarding how much is to be garnished.
For debt related to spousal or child support, the process in California is similar. However, the creditor only needs the original court order for support to enforce the order, not a separate judgment based on not receiving the support. The creditor sends an Earnings Withholding Order for Support to the employer. The employer is given 10 days to process the garnishment paperwork. It does not withhold any wages during these ten days. However, it begins to withhold wages from paychecks that are given after the 10 days have expired. If there is an order for child support and spousal support, California law requires the amount due for child support to be deducted from wages first.
For consumer debts, California permits creditors to garnish up to 25 percent of a debtor's disposable earnings or the amount of the debtor's disposable earnings that exceed 40 times the state minimum wage, whichever is the lower amount. In 2015, the state minimum wage was $9 an hour. If an employee had $500 in disposable earnings, 25 percent of those earnings would be $125. Additionally, 40 times the California minimum wage would be $360, so $140 could be garnished. Under this calculation, the creditor could only garnish $125 since that is the smaller amount. For support orders, California permits up to 50 percent of a debtor's wages to be garnished.
Generally, the employer must follow the instructions on the first garnishment writ that it receives. However, tax and support orders take priority in California over garnishments for consumer debts. The subsequent garnishment order is ineffective if a garnishment order is already in place for another debt.
Income Subject to Garnishment
Earnings from wages are subject to income execution from private and public judgment creditors, such as credit card companies and private student loan lenders, child support creditors, the U.S. Department of Education, the New York State Department of Taxation and Finance and the Internal Revenue Service. However, most federal benefits, including Social Security Disability, Supplemental Security Income Benefits and Veterans benefits, are exempt from garnishment by a private creditor.
Income Execution Limits
New York income execution laws differ only slightly from those in Title III of the federal Consumer Credit Protection Act. The most a private creditor or the New York State Department of Taxation and Finance can garnish is 10 percent of your weekly gross salary or 25 percent of your weekly disposable income, whichever is less. However, if your income does not exceed 30 percent of the current minimum wage, a private creditor cannot garnish your wages.
The Department of Education can garnish up to 15 percent of your disposable income, subject to the 30 percent rule. Child support can consume 50 percent to 60 percent of your disposable income. The amount that the IRS can take depends on how many dependents you claim and on your tax deductions.
Multiple Garnishment Rules
The 10 percent and 25 percent income execution limits apply even in a multiple wage assignment situation. If you have more than one income execution order, child support is always the top priority, even if it means stopping an existing garnishment. For two or more orders from private judgment creditors, or an order from a private creditor and the Department of Education, the first one received takes priority.
Just like in most states, a private judgment creditor cannot garnish your wages without a legal judgment for money. However, unlike in most states, a judgment creditor must first serve you with a notice of income execution and give you 20 days to make payment arrangements before sending a writ of garnishment to your employer. In addition, a child support creditor, the Department of Education and income tax agencies can bypass court proceedings by filing an administrative order.
Garnishment Laws in Virginia
The federal government has guidelines for wage garnishment under the aegis of the U.S. Department of Labor. These guidelines are applicable in all 50 states, the District of Columbia, and U.S. territories and possessions. All companies are required to honor wage garnishment orders, which are typically issued by family courts, state agencies or the IRS. Individual states may choose to change these laws to a certain extent so as to make them more appropriate for their socioeconomic context. If the state’s garnishment law stipulates a different amount from the federal law, then the law resulting in the smaller amount being garnished will prevail. The state of Virginia has its own wage garnishment laws.
Garnishment laws in Virginia stipulate a maximum amount that can be deducted from an employee’s salary, and they also prevent the employer from discharging the employee if the wages are garnished. However, the law does not rule out the option of discharging the employee if the wages are garnished to two or three creditors. A voluntary decision by the debtor to have deductions taken is not considered garnishment. The law stipulates that the maximum amount of an individual’s weekly earnings that can be attached be less than 25 percent of earnings or the amount by which it exceeds 30 times the minimum wage. Other exemptions include property (up to $5,000 and an additional $5,000 per dependent), insurance and annuities, retirement benefits (up to $17,500 per year) and public entitlements. For veterans, an additional $2,000 from property is also exempt.
For the purpose of wage calculation, disposable income should be considered instead of gross income--the net pay received by the employee after paying for legal deductions, taxes, state unemployment insurance, or employee retirement-related investments. However, if the employee is paying for voluntary or charitable contributions, union dues, personal insurance premiums, savings or optional retirement plans, then those will not be taken into consideration. Further, the law stipulates that the maximum amount that can be garnished in a time frame be limited.
A wage garnishment is the result of a legal judgment being placed against an individual. It allows a portion of each pay the person receives to be withheld by the employer and remitted to settle a debt.
In Pennsylvania, wage garnishment is typically not a legal practice. There are, however, certain criteria that an individual must meet to be protected under the law.
The first two criteria are that the individual must live and work in the state of Pennsylvania. The third is that the legal proceedings that resulted in the judgment were held in the state.
If a person is sued in another state while living in Pennsylvania or was sued prior to living or working in the state, the law may not apply. The issue is open for debate, however, and may result in a second court proceeding to determine how the nuances of the law will be interpreted for a given set of circumstances.
There a few exceptions to the Pennsylvania laws, which may result in the garnishment of wages. These exceptions include spousal or child support or a lump sum granted during a divorce proceeding, past-due balances on state-sponsored education loans, and payments relating to room and board or back rent.
If a question arises about whether wage garnishment may be enforced as the outcome of a judgment, those concerned should seek the advice of a consumer attorney (see link in Resources).