What is the Maximum Wage Garnishment?
A wage garnishment happens when the court orders part of your pay to be withheld to satisfy a debt you owe. You typically don't have to worry that anyone you owe can start garnishing your wages. There's a process that must happen before your creditors can garnish your wages. Most creditors can’t get permission to garnish your wages without first filing a lawsuit against you and then winning a judgment in that lawsuit. Then, if you haven’t satisfied the lawsuit judgment, the creditor can later ask the court for permission to garnish your wages.
When the court agrees to a wage garnishment, your employer will withhold a portion of your pay and send it to the creditor until your debt is completely paid off. You may, optionally, send extra money to the creditor on top of the wage garnishment to pay your debt off faster.
How Much Of Your Wages Can Be Garnished?
If you’ve recently been notified that your wages are going to be garnished or you currently have a wage garnishment, you may wonder just how much of your income can be garnished. The Consumer Credit Protection Act limits the amount of your wages that can be garnished. Thankfully, this means a creditor can't take your entire paycheck, leaving you without enough money to survive.
The maximum amount that can be garnished from your paycheck is the lower of the following:
- 25% of your disposable income if your disposable income is greater than $290.
- Any amount greater than 30 times the federal minimum wage: $217.50.
For example, if you make $800 per week after taxes and other deductions; 25% of this disposable income would be $200. The amount of your income that's greater than 30 times the federal minimum wage is $582.50 ($800 - $217.50). Since 25% of your disposable income ($200) is less than $582.50, the maximum wage garnishment in this case would be $200.
How Salary Deductions Affect Your Wage Garnishment Amount
The amount of your income that can be garnished is based on a percentage of your disposable income. For the wage garnishment calculation, your disposable income is your gross income minus any legally required deductions including federal, state and local taxes, unemployment insurance, social security deductions, and state retirement systems.
Deductions that aren’t required by law – like health insurance and charity contributions – are not subtracted from your gross income to determine your disposable income. These deductions will be taken from your pay after the wage garnishment and will further reduce the amount of your take home pay. If you’re currently having your wage garnishment, revisit your deductions to see if you can change anything to add more money to your take home pay.
Exceptions to Wage Garnishment Limits
These limits don't apply to garnishments for unpaid tax debts, bankruptcy court orders, child or spousal support, or voluntary wage assignments.
For child and spousal support payments, up to 50% can be garnished if you have another child or spouse to support. Otherwise, your maximum wage garnishment could be up to 60%. If you have to pay more than 12 weeks of back payments, you could be garnished an additional 5% to cover these payments.
Federal agencies can garnish up to 15% of your wages and the Department of Education can garnish 10%.
Your state may have different limits on wage garnishment. In cases, where the state wage garnishment limits are different from the federal limit, the one that results in the lower garnishment amount is used.
If the Wage Garnishment Presents a Hardship
The wage garnishment amount could still be so high that it leaves you unable to afford the basic living expenses. If this is true, you may be able to file a claim of exemption to reduce the wage garnishment amount. Bankruptcy is another option for certain types of unsecured debts, but not for student loans, child support, and some tax debts.