Wage Garnishment

What Exactly Is A Wage Garnishment?

A wage garnishment is something that occurs generally after the filing a lawsuit and the issuance of a judgment. It’s usually a post-judgment remedy where the creditor seeks a court order allowing it to “garnish” money directly from the debtor’s paycheck. Debtors are entitled to contest the garnishments, but it is typically an exercise in futility. After all, a court of competent jurisdiction has already issued a judgment on the issue. A wage garnishment is a severe remedy, but creditors, in order to get paid, will do what they have to collect. If there is any solace to being in this situation, a wage garnishment is usually so far down the line, that there could be so many steps that a debtor could have taken to avoid it or lessen its impact.

Can Creditors Withdraw For Their Bank Accounts Without Authorization Of The Debtor?

With respect to a wage garnishment or any other bank attachment of an account, they do not occur in a vacuum. A lawsuit has been filed and the judge presiding over the proceeding, after hearing evidence, has issued an order for a wage garnishment or bank attachment. Nowadays, wage garnishments are something that usually occurs at the end of a case once a judgment has issued. There was a time that wage garnishments were allowed at an early stage of a case, but it has been decades. On the other hand, bank attachments in decades past were often granted on ex-parte meaning the debtor didn’t know their bank account had been attached until checks stop clearing. These days, judges have decided that ex-parte bank attachments require a notice to the debtor. So now, rather than the account being attached without notice, with notice, the debtor empties the account so that when the bank attachment is allowed and processed it attaches to nothing. Logic no!

Do All Creditors Need a Court Order to Garnish Wages

Usually, a general creditor, such as a credit card company, bank or medical practitioner needs to file a lawsuit and receive a judgment before they can attempt to garnish wages. Every rule, however, has exceptions. In certain instances, your wages can be garnished by the taxing authorities to collect unpaid income taxes. Domestic support matters such as court ordered child support and child support arrears. In certain circumstances defaulted student loans can be collected through a wage garnishment. Here are limits in Massachusetts on the following: 

Child Support

Since 1988, all court orders for child support include an automatic income withholding order. The other parent can also get a wage garnishment order from the court if you get behind in child support payments.

Federal law limits what can be taken from your paycheck for this type of wage garnishment. Up to 50% of your disposable earnings may be garnished to pay child support if you are currently supporting a spouse or a child who isn’t the subject of the order. If you aren’t supporting a spouse or child, up to 60% of your earnings may be taken. An additional five percent may be garnished for support payments over 12 weeks in arrears.

Student Loans in Default

If you are in default on a federal student loan, the U.S. Department of Education or any entity collecting for this agency can garnish your wages without first getting a court judgment – this is called an administrative garnishment. The most that the Department of Education can garnish is 15% of your disposable income, but not more than 30 times the minimum wage.

Unpaid Taxes

The federal government can garnish your wages if you owe back taxes, even without a court judgment. The amount it can garnish depends on how many dependents you have and your deduction rate.

States and local governments may also be able to garnish your wages to collect unpaid state and local taxes. Contact your state labor department to find out more. (You will find a link to your state labor department below.)

Multiple Garnishments

Sometimes, there is justice. If you have more than one garnishment, the total amount that can be garnished is limited to 15%. For example, if the federal government is garnishing 15% of your income to repay defaulted student loans and your employer receives a second wage garnishment order, the second creditor must wait until the first garnishment ends (or until the first garnishment takes less than 15% of your gross wages).

What Is The Maximum Amount That Can Be Garnished From A Paycheck?

There are limits to how much money can be garnished from your paycheck. The idea is that you should have enough left to pay for living expenses.

Federal law places limits on wage garnishment amounts. However, Massachusetts imposes even stricter limits. In Massachusetts, the most that can be garnished from your wages is:

• 15% of your gross wages (that is, before taxes or other deductions are taken out) or your disposable income less 50 times the greater of the federal ($7.25/hour) or the Massachusetts hourly minimum wage ($8.00/hour as of January 2012) per week.

These limits do not apply to garnishments for domestic support, meaning child support or alimony.

Example. You earn gross wages in the amount of $1,000 per week. 15% of your gross wages is $150 and your disposable earnings less 50 times the Massachusetts minimum wage of $8.00 (because Massachusetts’ minimum wage is currently higher than the federal minimum wage) is equal to $600. Your creditor can garnish up to $150 of your wages per week.

Is There Any Way I Can Protect My Account From Creditors Looking To Garnish My Paycheck?

When they think about it, businesses often will set up an account, the payroll account, and run the all of their expenses through a payroll account because in theory a payroll account is exempt from creditor attachments. However, if you have claims out there, it’s possible that a creditor can attach the money to your bank account. As I said, my experience is that it usually occurs with notice, so it’s a lot less effective. But anything is possible, and again, don’t leave more money in the account if you have a creditor chasing you. You are better off keeping it in a sock, especially with the interest rates being what they are.

• Does The Automatic Stay Apply To All Creditors And All Types Of Debt?

How Bad Does Your Debt Have To Be For A Creditor To Start Garnishing Wages?

Wage garnishment begins strictly at the discretion of the creditor. There was a time when creditors, before they file the lawsuit, do an asset search, get out of home, will attach your house, and do other means tests. But it’s the luck of the draw, and they are not as aggressive in certain things anymore. It’s become collections which is very wrong. But then, on the other hand, I’ll give you a recent experience of a client. He had a judgment and execution issued against him in 2008, and nothing ever came of it. It was marked unsatisfied. Evidently, several companies, one in Massachusetts, look to acquire these judgments, and then what they do is they seize this car. The limit on a car seizure is $7500, and the vehicle is not even worth maybe $1000, but they don’t care. It would be more expensive for the car owner to attempt to get it back than the car is worth.

Will Filing For Bankruptcy Stop Wage Garnishments?

Filing for bankruptcy will stop wage garnishments. You may have a payment or two taken after the filing because notifying the creditor and the bank may take time, but you will get those payments back. Those garnished payments violate the automatic and need to be returned. Soon the wage garnishment will be a thing of the past.

Could All Types Of Bankruptcy Stop A Wage Garnishment?

The automatic stay applies to the garnishment in Chapter 7 or for an individual who would file a Chapter 11 or a Chapter 13.

For more information on Wage Garnishment In Massachusetts, an initial consultation is your best next step. Get the information and legal answers you’re seeking by calling (978) 922-8440 today.