Your wage can be garnished if you owe money to the creditors or lenders. The honorable court can issue an order to withhold a certain amount of your paycheck to repay the creditors or lenders to whom you owe the money. Your wage will be garnished until your debt is paid off.
However, there are some limitation on wage garnishment based on some criteria.
Read the entire article to know in detail.
How much of your income can be garnished?
The Consumer Credit Protection Act limits the amount of your income that can be garnished. The wage garnishment law is also governed/regulated by the state. Remember, the wage garnishment law varies state to state. Thus, you should know your state’s specific wage garnishment law.
If your state doesn’t provide more protection than what is provided by the Federal Law, then 25% of your net income can be garnished.
When the judgment is paid off, the creditor has to cancel the garnishment. The limit depends on the number of creditors or lenders you owe money to.
But each of them should have a judgment to garnish your wages (25%) until the judgment is paid off.
If you have multiple creditors with judgment, they should share the 25% of the disposable income.
This will apply for each of the judgment against you.
After one judgment gets paid off, the second creditor will start garnishing 25% of your wages and so on.
In case your income is low and negligible, then the creditors will not be able to garnish the full 25% of your wages.
Your rights in the wage garnishment process
To deal with a wage garnishment process, you have to know about your rights.
It will also help you in fighting a wage garnishment if you think it is placed illegally.
- You should be informed legally about the wage garnishment.
- You have a right to dispute the garnishment order if you find any error and misleading information in the notice.
- You can challenge the garnishment order if you believe that the debt is not yours.
- Your employer can’t fire you from the job for having one garnishment. However, you can be fired if you incur multiple garnishments.
- Your Social Security benefit and veteran benefit are exempted. But, this income could be subject to garnish once you save it in your bank account.
What to do when you get a garnishment judgment
- If you get a wage garnishment notice, at first, you should read the notice carefully.
- Make sure it is your debt. To do so, you can check your credit report. It will also help you understand to whom you owe the money.
- Contact the creditors or debt collectors to whom you owe. Talk to the creditor or collection agency for a payment plan.
- If you can’t remember the debt, which is mentioned in the garnishment notice, then challenge the judgment. Make sure you respond the garnish letter within 5 business days. To do so, you need to consult a consumer law attorney or call local legal aid for help.
- If the debt is yours, then accept it. Try to pay off the garnishment in installments or pay in a lump sum by taking out a personal loan from family members or a friend. It will help you to stop garnishment easily.
- However, taking out a payday loan can create more financial troubles; so, avoid taking out a payday loan.
- If you are unable to find the best possible solution for the wage garnishment problem, then consult a nonprofit credit counselor to know the best debt relief options like bankruptcy or other repayment options.
- Be honest at your workplace. Talk to your employer about it and work hard. Financial problems can arise in anyone’s life. So, don't feel demotivated or embarrassed. Stay positive and deal with your money more responsively to avoid such financial mess in the future.
Wage garnishment laws in California
The wage garnishment laws vary by states as I said earlier.
However, there is a similarity in California's wage garnishment laws with the federal wage garnishment laws.
If you belong to California, then check out wage garnishment laws mentioned in below.
California wage garnishment laws
- In California, the creditors are not allowed to garnish more than 25% of a debtor's disposable income (Income left after paying off the taxes).
- There is special wage garnishment limit for child support, student loans, and unpaid taxes.
- The creditor or collection agency should file the lawsuit against the debtor within 4 years of the default date.
- If the judgment is true and the court gives the order for the wage garnishment, then the creditor can garnish the wage for up to 20 years or until the debt is paid off.
- Under California wage garnishment law, some incomes are not subject to wage garnishment like IRAs and 401Ks, unemployment and workers’ compensation benefits, county assistance, student financial aid, and union benefits, some insurance benefits (payments received from life and homeowners insurance policy), Social Security benefits (Except in cases of default, child support, and income tax)
- In California, creditors are not allowed to garnish wages unless they sue the debtor and get a court judgment against him/her.
Your wage can be garnished without a court’s judgment:
- If you don’t pay the income tax
- If you have a court order for child support
- If you default on your student loans
Lastly, the federal wage garnishment laws including the California wage garnishment laws are complicated.
For common people, the laws can be difficult to understand.
Thus, it is advisable to seek help from an attorney before taking any decision.
If you are having a wage garnishment in California, then you should take help from a California wage garnishment attorney.