Back Posts
blogpay adspace banner

PART ONE OF WHAT YOU NEED TO KNOW ABOUT WAGE GARNISHMENT

August 6, 2023
2 years ago
Adaora Okonkwo Avatar
PART ONE OF WHAT YOU NEED TO KNOW ABOUT WAGE GARNISHMENT

A wage garnishment is a court-issued judgment mandating that a percentage of your income be diverted to satisfy a debt. Common reasons for garnishments include unpaid child support, student loans, and consumer debts. According to internal data collected by ADP, 7% of employees in the United States have at least one wage garnishment.   You may have more protection when it comes to exclusions and creditor restrictions depending on where you live—do your research and see how percentages split down. Here's the general math on federal limits:



  • Child support/alimony: Up to 60% (up to 50% if you’re supporting another child or spouse). There may be a 5% late penalty if you exceed 12 weeks in late payments.
  • Federal student loans: Up to 15%
  • Consumer debt (for example, credit card or medical bills): 25% of your earnings (or) the amount of your earnings that’s more than 30 times the federal wage (which is currently $7.25 an hour)—whichever amount is less.
  • Taxes: The IRS determines this figure based on your standard deductions and the number of dependents in your household. Talk to your creditors. There’s no risk in conveying the financial impact a garnishment would have and negotiating a better path forward. Talk with your creditors and see if they can create a payment plan that works for you.

Contest the ruling. Was the garnishment imposed in error, or will it impose a major financial burden? You can raise an objection in court. Be aware that the window of opportunity to do so may be limited—a few days at most in some circumstances. File for exemption. Depending on your situation, certain types of income (such as Social Security or retirement) may apply for exemption status.


Declare bankruptcy. If your financial position is dire, you can file for bankruptcy; however, you should contact with a bankruptcy professional first, as this can be a complicated and legally difficult procedure. Accept the judgment. Whether you take out a loan, pay in full, or pay in installments, be transparent with your employer about the process (and the fact that you’re being proactive in handling it).

Seek support. Find out what resources your financial provider can offer in managing the impact of garnishment. You can also connect with a qualified, caring counselor at GreenPath Financial Wellness, who can assist you with understanding your overall financial picture and developing a personal action plan to achieve your goals.