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Understanding how wage garnishments work

If you have missed a series of payments resulting in delinquent accounts, then you understand just how persistent creditors can be in demanding payments on your debts. That being said, a progression of time or lack of communication with the creditors does not make them go away.

After tirelessly calling without a resolution, most creditors ultimately pursue legal action aimed at staking their claim on any future income or proceeds you may come into. Creditors most often do this by seeking out a court judgment or a wage garnishment.

In the case of wage garnishments, they involve the withholding of a portion of a person's earnings to satisfy a debt. They can be either voluntary, initiated on behalf of an employee, or involuntary, mandated by court order.

Voluntary wage garnishments include those where employees give their employer permission to withhold from their paycheck and send money automatically to their creditors. Alternatively, the involuntary variety includes both federal or local government tax and non-tax debts, automatically withheld by an agency.

Under Title III of the Consumer Credit Protection Act, if your net income is $217.50 or less per week, then your wages cannot be garnished. However, if it falls between $217.51 and $289, any amount amount above $217.50 can be garnished. Earnings over $290 per week can be garnished at a rate of 25 percent.

When it comes to child support, up to 50 percent of your disposable income can be garnished for child support or alimony if you have a spouse or another child. In cases in which you don't, 60 percent can be. An additional 5 percent can be assessed if you fall behind on payments by more than 12 weeks.

That being said, those same limitations do not apply to certain bankruptcy court orders or situations involving back taxes. In instances where state law differs from Title III, then the law resulting in a lower amount being garnished is observed.

As for federal, non-tax defaulted debts, the Debt Collection Improvement Act gives its federal agencies and their contractors the authority to garnish up to 15 percent of your earnings. The Higher Education Act allows for wage garnishments for defaulted student loans at a rate of 10 percent of your income.

If you or someone you know is experiencing or facing a wage garnishment, a Knoxville, Tennessee, bankruptcy attorney can provide advice and guidance in your legal matter.

Source: U.S. Department of Labor, "Fact Sheet #30: The Federal Wage Garnishment Law, Consumer Credit Protection Act's Title III," accessed Feb. 24, 2017

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