Wage garnishment is a common way that creditors seek debt compensation. It occurs when your employer deducts money from your paycheck and sends it to the creditor or collection agency.

Wage garnishments can have a severe effect on your finances. However, there are ways to challenge them and work out a better deal with your creditors.

Court-Ordered Garnishment

Wage garnishment allows creditors to collect the money you owe them. It involves a lawsuit and a court order that allows the creditor to force your employer to deduct specified funds from your wages before you receive them.

Garnishment is usually used to collect unpaid taxes, alimony or child support payments, and debts from over-the-counter financial products (like credit cards and auto loans). However, it can also be used for other reasons, like unpaid student loans.

The law allows the creditor to take up to 25% of your disposable earnings each week — that’s what you still have left after deductions for state, federal, and local income taxes, Social Security and other government benefits, and unemployment insurance. Some states limit this amount or have other exemptions to prevent debtors from being forced into poverty.

The creditor must first get a court order for garnishment in New York. This will include a summons and complaint with a court date you must attend. If you are served, you can object to the garnishment or raise a defense in your answer.

You can stop wage garnishment in several ways, including filing for bankruptcy or paying off the debt yourself. You can also ask the judge to order a payment plan by filing a Motion for a Payment Plan or Objection to Garnishment.

Administrative Garnishment

If a federal agency has determined that you owe a debt to the government, it can initiate proceedings administratively to garnish your wages. This process, called Administrative Wage Garnishment (AWG), is authorized by the Debt Collection Improvement Act of 1996.

AWG allows the federal government to withhold up to 15 percent of your disposable earnings from your paycheck to satisfy a delinquent non-tax debt. AWG does not require a court order and may be used to collect a debt unrelated to taxes, such as child support or alimony payments, or if the creditor does not have a judgment against you.

The government must give you at least 30 days’ notice before instituting wage garnishment. You can then agree to a repayment plan, pay the debt in full, or object and request a hearing.

You may also file an exemption claim to protect some or all of your income. The amount that can be saved depends on the type of debt and state law.

A wage garnishment payroll can take up to 15% of your “disposable” pay per pay period, calculated by multiplying your weekly income by the federal minimum wage. This can be significant if you have little left over after paying for housing, food, medical insurance, transportation, and other living expenses.

Exempt Garnishment

A garnishment is a legal order that directs your employer to withhold a certain amount of your wages and send them to the creditor or court. It is most commonly used to collect debts like taxes, federal student loans and alimony.

Before a creditor can garnish your wages, it must win or get a default judgment in court. After the creditor obtains a review, it sends documentation to your employer, typically through a sheriff’s office.

Once the garnishment has been ordered, your employer will subtract it from your earnings for each pay period and report the total amount to the creditor or the attorney. The employer will hold the amount until the creditor is satisfied or a judge orders it to stop.

If you’re struggling with debt, you can ask the court that issued the underlying garnishment to reduce or cancel it entirely by filing a claim of exemption. This requires you to fill out a form and provide evidence for your claim.

Most states have several different exemptions that protect salary earners from wage garnishments. These are usually based on the types of income you receive and the state you live in.

Exemptions are a great way to reduce or eliminate wage garnishments. For example, suppose you receive Supplemental Security Income or SSI benefits. In that case, your entire income can be protected from garnishment as long as the creditor can prove that you don’t have any other sources of income. You can also claim a “necessaries of life” exemption if you need to take care of things like food, clothing and shelter for yourself or your family.

Non-Wage Garnishment

When creditors, debt collectors or debt buyers get a court judgment against an individual, they can use wage garnishment to collect that debt. Wage garnishment is a legal procedure that allows creditors to take up to 25% of an employee’s disposable income from each paycheck until the debt is satisfied.

In some cases, however, the garnishment will go beyond wages and include other forms of property. Non-wage garnishment is one way a creditor can reach your assets, such as bank accounts, cars, and home.

The plaintiff’s counsel serves these orders on banks in debt collection lawsuits. They often represent a fishing expedition by the plaintiff’s attorneys to discover where the debtor’s funds may be.

As a result, many banks have become increasingly challenged in processing and complying with third-party orders for non-wage garnishments and levies. Because many banks serve these orders, they can be extremely time-consuming and complex.

If you find yourself in a garnishment dispute, contest it as soon as possible to prevent your assets from being attached. Also, it would help if you thoroughly investigated the judgment and the creditor’s filing. If the decision is based on inaccurate information, it’s essential to challenge it as quickly as possible.

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Nick Jones

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