The Legal Procedure Of Wage Garnishment
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The Legal Process of Wage Garnishment
Overview
Wage garnishment is a legal procedure where a portion of an individual's earnings is withheld by an employer to pay off a debt. This typically occurs through court orders, but can also result from IRS or state tax agency levies for unpaid taxes.
While some employees voluntarily agree to have parts of their salary paid to creditors, wage garnishment is involuntary and initiated by legal mandate.
Protection Under the Law
Title III of the Consumer Credit Protection Act (CCPA) limits the amount of wages that can be garnished for a single debt and protects employees from termination due to garnishment. If disputes arise, they must be addressed directly in court or with the agency responsible for the garnishment.
This law safeguards personal earnings, such as pensions and bonuses, across all 50 states. However, multiple garnishments for different debts are allowed.
Restrictions and Calculations
Wage garnishment is calculated based on disposable earnings, which are earnings left after required deductions like taxes and social security. Voluntary deductions like union dues, health insurance, and charitable contributions do not affect this amount.
The CCPA sets a maximum garnishment limit per pay period, regardless of the number of garnishment orders an employer receives. For standard garnishments (excluding bankruptcy), the lesser of two amounts is used: 25% of disposable earnings or the amount by which disposable earnings exceed 30 times the federal minimum wage. If a worker's disposable earnings are less than this threshold, garnishment cannot proceed.
Special Cases
The garnishment restrictions do not apply to bankruptcy proceedings or unpaid federal or state taxes. In such cases, the potential garnishment amount might be higher.
Process and Notifications
Garnishment is generally a last-resort measure after other debt settlement methods fail. Employers must typically obtain a court order and notify the employee 20 days before garnishment begins.
Ignoring IRS notices can lead to immediate wage garnishment. Apart from government entities, private creditors or even an ex-spouse seeking alimony can pursue garnishment.
Conclusion
Title III of the CCPA ensures fair garnishment limits, allowing employees to retain some income while enabling creditors to recover debts. This balance prevents creditors from accelerating debt recovery excessively.
By understanding these protections and processes, employees and employers can navigate wage garnishment with clarity and legal compliance.
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