When debtors fall behind or default on their debts, creditors have numerous means to get them to pay. One method is to have debt payments taken out of a debtor’s paycheck. This is known as wage garnishment.

Whether a creditor can have someone’s wages garnished depends on both the type of debt and the state where the debtor resides. Certain types of debt are always subject to wage garnishment anywhere in the United States. Some states, however, do not allow wage garnishment for other types of debt. Where states do allow wage garnishment, the creditor might first need to file a lawsuit, obtain a judgment, and then obtain a court order for garnishment.

Creditors can only garnish wages up to a certain amount or percentage. It does not help the creditor if they take a debtor’s entire paycheck, leaving them with no money for food or shelter. Debtors may be able to stop or modify garnishment for some types of debt.

Types of Debt

Some debts are always subject to garnishment. The specific laws or rules vary widely from one state to another. For the purposes of understanding wage garnishment, it is helpful to think of debts in the following categories:

• Secured Debt. When a person takes on debt in order to purchase something like a house or a car, the lender takes a security interest in the purchased item. If the debtor defaults on the loan, the lender can foreclose on that property to satisfy the debt. A mortgage loan, for example is secured by the house, and a car loan is secured by the car.
• Unsecured Debt. This is debt that is not secured by any specific property. It may include credit card debt, payday loans, and other consumer loans.
• Family Support Obligations. Child support and alimony are obligations arising from a divorce or other family law proceeding. They are governed by state law, in the state where the family court proceeding occurred.
• Student Loans. Loans taken out to pay for education are subject to different laws and rules than other loans. This includes both private loans and loans that are guaranteed by the U.S. Department of Education.
• Taxes. Federal income tax, state income tax, and other taxes usually take priority over all other debts.

Wage Garnishment Without a Lawsuit or Court Order

The federal government has significant power to garnish wages for unpaid taxes. The IRS can issue a wage garnishment order on its own authority, without obtaining a judgment from a court. It must send a notice to the taxpayer stating its intention to begin wage garnishment. The taxpayer has a brief period of time in which to respond before garnishment begins.

State taxing authorities might be able to issue wage garnishment orders on their own like the IRS. It varies from state to state.

The U.S. Department of Education has authority to issue wage garnishment orders when people default on student loans. Private companies that service loans for the Department of Education may also issue garnishment orders. Much like the IRS, they must send a notice to the debtor. This generally only applies to loans issued or guaranteed by the federal government. Private lenders usually don't have the same authority.

Wage Garnishment In Family Law Proceedings

A proceeding in family court, such as a divorce or a child custody dispute, is basically a lawsuit between spouses and/or parents. The parties must get an order signed by a judge in order to resolve their disputes. This judge also has the authority to issue orders for wage garnishment for child support or alimony (also known as spousal maintenance).

Courts in many states will automatically issue withholding orders when the judge orders support payments. Otherwise, the parent or ex-spouse entitled to receive support must request a withholding order from the court.

Wage Garnishment with a Lawsuit and Court Order

Creditors holding any other types of secured or unsecured debt must file a lawsuit against the defaulting debtor and obtain a judgment for the amount of debt owed. The creditor is then known as a “judgment creditor.” Whether a judgment creditor can obtain a court order for wage garnishment depends on state law.

A secured creditor might not able to recover the full debt amount through foreclosure. For example, if a homeowner owes $200,000 on their mortgage, but the lender can only sell it for $180,000 after foreclosure, the homeowner is still responsible for the remaining $20,000. The lender can sue the homeowner for that amount, and might be able to obtain wage garnishment.

Unsecured creditors, such as credit card companies, have no right to foreclose on any property. They must file a lawsuit and obtain a judgment in order to attempt wage garnishment.

Limits on Garnishment Amounts

State and federal laws set limits on how much a creditor may take out of a debtor’s paycheck. Most states, for example, will not allow garnishment of more than 50 percent of someone’s paycheck for child support. The maximum garnishment for student loan debt is usually 15 percent. Federal law sets limits on wage garnishment orders for judgment creditors of about 25 percent.

Garnishment and Bankruptcy

Some wage garnishment orders are effectively irrevocable. Garnishment for child support continues until the child hits certain milestones, such as turning eighteen or obtaining an order of emancipation. A court might modify the amount of child support owed, and therefore the amount withheld from a paycheck, but courts rarely stop garnishment while the order to pay support is still in effect.

If a judgment creditor got a wage garnishment order from a state court, the debtor can ask the court to modify or revoke the order in certain situations. Bankruptcy will stop most other types of wage garnishment, at least temporarily. A debtor can use bankruptcy to reorganize, pay down, or discharge their debts.

Contact an Attorney

If your wages are being garnished unlawfully, or if your employer hasn't withheld the correct amount, contact a knowledgeable attorney to discuss the best way forward.