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Wage Garnishment: How It Works and What You Can Do

Wage garnishment means a portion of your income, or part of your bank balance, can be diverted to resolve a debt.

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Wage garnishment can occur after a creditor sues you for nonpayment of a debt and wins in court.

Unpaid taxes, student loans and child support may result in garnishment even without a court order.

You have legal rights and some options: You can receive legal aid, challenge the judgment and also negotiate with creditors.

There are federal and state exemptions that protect some earned wages from garnishment.

Wage garnishment happens when a court orders that your employer withhold a specific portion of your paycheck and send it directly to the creditor or person to whom you owe money, until your debt is resolved.

Child support, consumer debts and student loans are common sources of wage garnishment. Your earnings will be garnished until the debt is paid off or otherwise resolved.

You have legal rights, including caps on how much can be taken at once. And you can take steps to lessen the effect and help you bounce back.

Types of wage garnishment and how it happens

Wage garnishment is more common than you might think. A 2022 report from the National Bureau of Economic Research looked at data from a large payroll processing company and found more than one in every 100 workers in the United States had been subjected to wage garnishment. On average, garnishments lasted five months and took 11% of gross earnings during the years studied, 2014-19.

» MORE: How to stop a wage garnishment

There are two types of garnishment:

In wage garnishment , creditors can legally require your employer to hand over part of your earnings to pay off your debts.

In nonwage garnishment , commonly referred to as a bank levy, creditors can tap into your bank account.

Garnishment often happens when a creditor sues you for nonpayment of a debt and wins in court. Sometimes, though, a creditor can force garnishment without a court order, for instance, if you owe child support, back taxes or a balance on federal student loans.

The court will send notices to you and your bank or employer, and the garnishment will begin in five to 30 business days, depending on your creditor and state. The garnishment continues until the debt, potentially including court fees and interest, is paid.

How much of your wages can be garnished?

Here’s an overview of the federal limits on how much of your disposable income a creditor can take. (When it comes to wage garnishment, “disposable income” means anything left after the necessary deductions such as taxes and Social Security.)

State laws around garnishment vary greatly. Your state may have additional protections that shelter more of your income or bank account balance, or it may offer exemptions for situations like being head of household with dependent children. In most cases, debtors must learn about exemptions and ask for them on their own. Nonwage garnishment, which is less common, is generally less regulated and has fewer restrictions for creditors.

What you can do about wage garnishment

You have some rights in the wage garnishment process, but in most states, it’s your responsibility to be aware of and exercise these rights.

You have to be legally notified of the garnishment.

You can file a dispute if the notice has inaccurate information or you believe you don’t owe the debt.

Some forms of income, such as Social Security, Supplemental Security Income and veterans' benefits, are exempt from garnishment as income. However, they could be subject to seizure once in your bank account .

You can’t be fired for having one wage garnishment, but you’ll lose this protection if you incur more than one garnishment.

If you believe the judgment was made in error or it’s causing undue harm to your finances, you can challenge the garnishment .

What to do when you get a garnishment judgment

First, carefully read the judgment to verify that all of the information is accurate. Make sure that it’s not something you already paid and that it’s in fact your debt . If it is, consider how much money will be taken and what it will mean for your financial situation.

Then weigh what to do next. If you haven’t done so before, you may want to consult a consumer law attorney or local legal aid to determine what’s best for you. You can also get attorney referrals from the American Bar Association or the bar association in your state.

You have three main options:

Work out a different deal

Contact your creditors. "A lot of consumers underestimate the power of a conversation," says Tara Alderete, director of enterprise learning at the nonprofit financial counseling agency Money Management International. "Look at a budget, see how much you owe, what you can pay, and then just call the creditor to see if you can work out a payment plan. Creditors and consumers always have that ability."

Challenge the judgment

If you believe the garnishment was made in error, will cause undue harm or is being improperly executed, you can object in court. You’ll have to act quickly. You may have as few as five business days to contest the ruling.

Accept the garnishment

You can pay off the garnishment in installments as the judgment states or pay in a lump sum. Borrowing money from a family member or taking out a personal loan to pay off the judgment, which is possible even with the garnishment on your credit report, could give you quick relief from the stress of a prolonged series of payments.

It can be embarrassing to have your employer know you’ve been sued for debt, but it’s best to be honest with your manager or human relations department.

"Wage garnishment can cause stress in the work environment, so be proactive in talking with your employer," Alderete says. "Have a conversation where you say what’s happening and that you don’t want it to become a problem."

If wage garnishment is a financial burden

If you don’t see a path forward from wage garnishment, consult the free services of a nonprofit credit counselor to discuss your debt relief options , such as a repayment plan or bankruptcy.

A garnishment judgment will stay on your credit reports for up to seven years, affecting your credit score. But there are a few easy ways to bolster your credit, both during and after wage garnishment.

Building a budget — and sticking to it — can help you stay on top of your finances to avoid another garnishment. And if typical budgeting advice doesn’t work for you, it’s OK to tailor it to your needs .

From there, you can take out products such as a secured credit card to work on restoring your credit . It may also be beneficial to look for ways to increase your income, via a second job or a side hustle .

Dive even deeper in Personal Finance

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NEWS RELEASES

WAGE AND HOUR DIVISION

UNITED STATES DEPARTMENT OF LABOR

Fact Sheet #30: The Federal Wage Garnishment Law, Consumer Credit Protection Act's Title III (CCPA)

Revised October 2020

This fact sheet provides general information concerning the CCPA’s limits on the amount that employers may withhold from a person’s earnings in response to a garnishment order, and the CCPA’s protection from termination because of garnishment for any single debt.

Wage Garnishments

A wage garnishment is any legal or equitable procedure through which some portion of a person’s earnings is required to be withheld for the payment of a debt. Most garnishments are made by court order. Other types of legal or equitable procedures for garnishment include IRS or state tax collection agency levies for unpaid taxes and federal agency administrative garnishments for non-tax debts owed to the federal government.

Wage garnishments do not include voluntary wage assignments – that is, situations in which employees voluntarily agree that their employers may turn over some specified amount of their earnings to a creditor or creditors.

Title III of the CCPA’s Limitations on Wage Garnishments

Title III of the CCPA (Title III) limits the amount of an individual’s earnings that may be garnished and protects an employee from being fired if pay is garnished for only one debt. The U.S. Department of Labor’s Wage and Hour Division administers Title III, which applies in all 50 states, the District of Columbia, and all U.S. territories and possessions. Title III protects everyone who receives personal earnings.

The Wage and Hour Division has authority with regard to questions relating to the amount garnished or termination. Other questions relating to garnishment should be directed to the court or agency initiating the garnishment action. For example, questions regarding the priority given to certain garnishments over others are not matters covered by Title III and may be referred to the court or agency initiating the action. The CCPA contains no provisions controlling the priorities of garnishments, which are determined by state or other federal laws. However, in no event may the amount of any individual’s disposable earnings that may be garnished exceed the percentages specified in the CCPA.

Definition of Earnings

The CCPA defines earnings as compensation paid or payable for personal services , including wages, salaries, commissions, bonuses, and periodic payments from a pension or retirement program. Payments from an employment-based disability plan are also earnings.

Earnings may include payments received in lump sums , including:

commissions;
discretionary and nondiscretionary bonuses;
productivity or performance bonuses;
profit sharing;
referral and sign-on bonuses;
moving or relocation incentive payments;
attendance, safety, and cash service awards;
retroactive merit increases;
payment for working during a holiday;
workers’ compensation payments for wage replacement, whether paid periodically or in a lump sum;
termination pay ( e.g. , payment of last wages, as well as any outstanding accrued benefits);
severance pay; and,
back and front pay payments from insurance settlements.

In determining whether certain lump-sum payments are earnings under the CCPA, the central inquiry is whether the employer paid the amount in question for the employee’s services .If the lump-sum payment is made in exchange for personal services rendered, then like payments received periodically, it will be subject to the CCPA’s garnishment limitations. Conversely, lump-sum payments that are unrelated to personal services rendered are not earnings under the CCPA.

For employees who receive tips, the cash wages paid directly by the employer and the amount of any tip credit claimed by the employer under federal or state law are earnings for the purposes of the wage garnishment law. Tips received in excess of the tip credit amount or in excess of the wages paid directly by the employer (if no tip credit is claimed or allowed) are not earnings for purposes of the CCPA.

Limitations on the Amount of Earnings that may be Garnished (General)

The amount of pay subject to garnishment is based on an employee’s “disposable earnings,” which is the amount of earnings left after legally required deductions are made . Examples of such deductions include federal, state, and local taxes, and the employee’s share of Social Security, Medicare and State Unemployment Insurance tax. It also includes withholdings for employee retirement systems required by law.

Deductions not required by law – such as those for voluntary wage assignments, union dues, health and life insurance, contributions to charitable causes, purchases of savings bonds, retirement plan contributions (except those required by law) and payments to employers for payroll advances or purchases of merchandise – usually may not be subtracted from gross earnings when calculating disposable earnings under the CCPA.

Title III sets the maximum amount that may be garnished in any workweek or pay period, regardless of the number of garnishment orders received by the employer. For ordinary garnishments ( i.e. , those not for support, bankruptcy, or any state or federal tax), the weekly amount may not exceed the lesser of two figures: 25% of the employee’s disposable earnings, or the amount by which an employee’s disposable earnings are greater than 30 times the federal minimum wage (currently $7.25 an hour).

Therefore, if the pay period is weekly and disposable earnings are $217.50 ($7.25 × 30) or less, there can be no garnishment. If disposable earnings are more than $217.50 but less than $290 ($7.25 × 40), the amount above $217.50 can be garnished. If disposable earnings are $290 or more, a maximum of 25% can be garnished. When pay periods cover more than one week, multiples of the weekly restrictions must be used to calculate the maximum amounts that may be garnished. The table and examples at the end of this fact sheet illustrate these amounts.

As discussed below, these limitations do not apply to certain bankruptcy court orders, or to garnishments to recover debts due for state or federal taxes, and different limitations apply to garnishments pursuant to court orders for child support or alimony.

Limitations on the Amount of Earnings That May be Garnished for Child Support and Alimony

Title III also limits the amount of earnings that may be garnished pursuant to court orders for child support or alimony. The garnishment law allows up to 50% of a worker’s disposable earnings to be garnished for these purposes if the worker is supporting another spouse or child, or up to 60% if the worker is not. An additional 5% may be garnished for support payments more than l2 weeks in arrears.

Exceptions to Title III’s Limitation on Wage Garnishments

The wage garnishment law specifies that its limitations on the amount of earnings that may be garnished do not apply to certain bankruptcy court orders, or to debts due for federal or state taxes.

If a state wage garnishment law differs from Title III, the law resulting in the lower amount of earnings being garnished must be observed.

Non-Tax Debts Owed to Federal Agencies

The Debt Collection Improvement Act authorizes federal agencies or collection agencies under contract with them to garnish up to 15% of disposable earnings to repay defaulted debts owed to the U.S. government. As of December 20, 2018, the Higher Education Act authorizes the Department of Education’s guaranty agencies to garnish up to 15% of disposable earnings to repay defaulted federal student loans. Such withholding is also subject to the provisions of Title III of the CCPA, but not state garnishment laws. Unless the total of all garnishments exceeds Title III’s limits on garnishment, questions regarding such garnishments should be referred to the agency initiating the withholding action.

EXAMPLES OF AMOUNTS SUBJECT TO GARNISHMENT

The following examples illustrate the statutory tests for determining the amounts subject to garnishment, based on the current federal minimum wage of $7.25 per hour.

An employee’s gross earnings in a particular week are $263. After deductions required by law, the disposable earnings are $233.00. In this week, $15.50 may be garnished, because only the amount over $217.50 may be garnished where the disposable earnings are less than $290.
An employee receives a bonus in a particular workweek of $402. After deductions required by law, the disposable earnings are $368. In this week, 25% of the disposable earnings may be garnished. ($368 × 25% = $92).
An employee paid every other week has disposable earnings of $500 for the first week and $80 for the second week of the pay period, for a total of $580. In a biweekly pay period, when disposable earnings are at or above $580 for the pay period, 25% may be garnished; $145.00 (25% × $580) may be garnished. It does not matter that the disposable earnings in the second week are less than $217.50.
An employee on a $400 weekly draw against commissions has disposable earnings each week of $300. Commissions are paid monthly and result in $1,800 in disposable earnings for July after already-paid weekly draws are subtracted and deductions required by law are made. Each draw and the monthly commission payment are separately subject to the law’s limitation. Thus, 25% of each week’s disposable earnings from the draw ($75 in this example) may be garnished. Additionally, 25% of the disposable earnings from the commission payment may be garnished, or $450 ($1,800 × 25% = $450).
An employee who has disposable earnings of $370 a week has $140 withheld per week pursuant to court orders for child support. Title III allows up to 50% or 60% of disposable earnings to be garnished for this purpose. A garnishment order for the collection of a defaulted consumer debt is also served on the employer. If there were no garnishment orders (with priority) for child support, Title III’s general limitations would apply to the garnishment for the defaulted consumer debt, and a maximum of $92.50 (25% × $370) would be garnished per week. However, the existing garnishment for child support means in this example that no additional garnishment for the defaulted consumer debt may be made because the amount already garnished is more than the amount (25%) that may be generally garnished. Additional amounts could be garnished to collect child support, delinquent federal or state taxes, or certain bankruptcy court ordered payments.

Title III Protections against Discharge when Wages are Garnished

The CCPA prohibits an employer from firing an employee whose earnings are subject to garnishment for any one debt, regardless of the number of levies made or proceedings brought to collect that one debt. The CCPA does not prohibit discharge because an employee’s earnings are separately garnished for two or more debts.

Where to Obtain Additional Information

For additional information, visit our Wage and Hour Division Website: http://www.dol.gov/agencies/whd and/or call our toll-free information and helpline, available 8 a.m. to 5 p.m. in your time zone, 1-866-4USWAGE (1-866-487-9243).

This publication is for general information and is not to be considered in the same light as official statements of position contained in the regulations.

The contents of this document do not have the force and effect of law and are not meant to bind the public in any way. This document is intended only to provide clarity to the public regarding existing requirements under the law or agency policies.