Wage Garnishment: What It Is and How to Respond

Key takeaways

For most consumer debts, a creditor needs a court judgment before it can garnish your wages.
Federal law usually limits garnishment for ordinary debts to 25% of disposable earnings, or less for low earners.
Your employer can’t fire you because of garnishment for any one debt.
Two months of directly deposited federal benefits, like Social Security, are generally protected in your bank account.
Many states give you more protection. Get legal help quickly.

Finding out that part of your paycheck will be taken for a debt is upsetting. But garnishment has rules and limits, and you may have options to reduce or stop it. Here’s how it works for consumer debts like credit cards and medical bills.

What garnishment is

Garnishment is a legal process that lets a creditor collect money directly from your wages or bank account. For most consumer debts, the creditor must first sue you and win a judgment. Then it gets a court order directing your employer or bank to send money to the creditor.

That’s why responding to a lawsuit matters so much. Read what to do if you’re sued for a debt.

Some debts can be collected differently, without a regular lawsuit, such as federal taxes, defaulted federal student loans, and child support.

Federal limits on wage garnishment

According to the U.S. Department of Labor’s fact sheet, for ordinary debts, the amount garnished each week can’t be more than the lesser of:

25% of your disposable earnings, or
The amount by which your disposable earnings are more than 30 times the federal minimum wage.

“Disposable earnings” means what’s left after legally required deductions, like taxes. With the federal minimum wage at $7.25 an hour, the Labor Department says no garnishment is allowed for ordinary debts if your disposable earnings are $217.50 a week or less.

Different limits apply to child support and alimony (higher), federal student loans and taxes. Many states set lower limits than federal law, so check your state’s rules.

Your job is protected (for one debt)

The Labor Department says federal law prohibits your employer from firing you because your earnings are garnished for any one debt, no matter how many garnishment orders it receives for that debt. The protection doesn’t cover garnishments for two or more separate debts.

Bank account garnishment and federal benefits

A creditor with a judgment may also be able to freeze or take money from your bank account. But federal benefits get special protection. According to the CFPB, when a bank gets a garnishment order, it must check whether federal benefits like Social Security or VA benefits were directly deposited in the last two months, and protect up to two months’ worth.

If you deposited benefit checks yourself, the bank doesn’t have to apply that automatic protection, and you may need to go to court to show the money is protected. Some benefits, like SSI, are protected even from most government debts.

How to respond

Read the notice carefully. It should say who the creditor is, the amount and how to claim exemptions.
Act fast. Deadlines to claim exemptions or request a hearing can be short.
Claim exemptions. Your state may protect more of your wages, or certain kinds of income or property.
Check the judgment. If you never got notice of the lawsuit, you may be able to ask the court to set aside a default judgment.
Get legal help. A legal aid office or consumer attorney can check for errors and exemptions.

Ways to stop or reduce garnishment

Negotiate with the creditor. Some will accept a voluntary payment plan or settlement instead. Get any agreement in writing, and make sure it says the garnishment will be released. Forgiven debt may be taxable.
Pay off the judgment, if you can.
Bankruptcy generally stops most garnishments through the “automatic stay.” See Chapter 7 vs. Chapter 13 bankruptcy and talk to an attorney.

Budget for the gap

If your paycheck is smaller for a while, protect your essentials first. Our bare-bones budget guide shows how to protect housing, utilities and transportation first.

The bottom line

Wage garnishment usually comes after a court judgment, and federal and state laws limit how much can be taken. Read every notice, act on deadlines, claim your exemptions and get legal help, often free through legal aid.

Sources: U.S. Department of Labor: Fact Sheet #30, wage garnishment · CFPB: can a debt collector take my federal benefits · CFPB: what to do if you’re sued by a debt collector or creditor