Debt: Wage Garnishing at the State Level

Nobody wants to have part of their earnings taken away every week to pay off old debts. But if you’re not willing to set aside money yourself, did you know that your creditor can get a judge to do it for you? If your creditor obtains a judgment against you for an unpaid debt, a writ of garnishment is one method they might use to recover the money you owe them. If you have your wages garnished, your employer is legally required to set aside part of your paycheck to satisfy your old debt. If your wages are garnished, you can expect to have a percentage of your wages taken out pay period until the debt is payed off.

What happens when your wages are garnished, and what state laws protect you in the case of wage garnishments? Depending on where you live, some states have laws in place regarding the garnishing of wages. These laws govern the amount that can legally be exempted from garnishment, how much interest a creditor may charge, and the statute of limitations on collecting the debt or judgment. Some states will allow up to 12% interest on a judgment while others will only allow 6% or 7%. It’s good to know that if federal law exempts a larger portion of your disposable earnings per week (currently 75%, or thirty times the federal minimum hourly wage of $5.15, whichever is greater), the federal law will supersede whatever state law applies in your case.

Also, keep in mind that the state laws for wage garnishment that are on the books only apply to creditors, such as revolving accounts (credit cards) and bank loans. If your wages are garnished for federal student loans, child support, or alimony, the federal legal exemptions will not apply and you may find yourself liable for much higher amounts.