Understanding Wage Garnishment Law

Answer 1

Wage garnishment occurs when a creditor goes to court and obtains a court ordered judgment that allows them to receive a portion of wages earned towards repayment of a debt. Child and family support, delinquent taxes and delinquent student loans are not subject to court order, instead, wages may be garnished directly by the agencies responsible for collection.

State Laws and Wage Garnishment

There are some states that prohibit wage garnishment under certain circumstances. For example, New Hampshire wage garnishment laws allow creditors to attach wages that are earned but unpaid, but do not allow for ongoing garnishment. State laws govern maximum amounts that may be garnished but in most cases, they adhere to the federal guidelines established by the Department of Labor, Wage and Hour Division.

Maximum Amounts Allowable

Federal law puts specific restrictions on most wage garnishment orders, excluding taxes, family support and student loans. Creditors may only be allowed to garnish 25 percent of an employees wages or specific amounts over federal minimum wages. It is important to note that many states have stricter guidelines for garnishing wages.

Statute of Limitations on Debt Collection

Many debtors are not aware that most debts have a statute of limitations. These statutes are covered under the Fair Debt Collection Practices Act. Different states do have their own statute of limitations on specific types of debt. They do not cover family support, taxes or student loans. However, consumer debt in the form of credit cards, revolving lines of credit and certain contracts are covered.

Stopping Wage Garnishment

Consumers who feel they are having their wages garnished in violation of any laws should contact an attorney. However, it is important to note that employers are obligated to withhold funds, in some states their failure to garnish wages of an employee may result in their assuming responsibility for the debt.

Wage Garnishment and Employment Law

Employers are not allowed to fire or otherwise discriminate against an employee due to a single wage garnishment order. They may not discriminate against the employee for purposes of promotions, salary increases, etc. It is important to note however, that multiple wage garnishment orders are not protected.

Employees who have had their wages garnished may lose up to 25 percent of their income regardless of whether they are earning an hourly wage, commission or any other form of compensation. Only tip income is exempt from wage garnishment. In some cases, disability payments may be excluded, however retirement income is not protected from possible wage garnishment.