State and federal laws give creditors a number of options for collecting on judgments. They need all of the options they can get, given the fact that debtors have a habit of trying to avoid paying. One such option is wage garnishment. Just the threat of wage garnishment can be enough to motivate a debtor to pay.
Fortunately for creditors, garnishing a debtor’s wages is a fairly simple process. It is straightforward and easy to understand. And as long as the debtor doesn’t quit his or her job, wage garnishment guarantees a steady stream of revenue until the judgment is completely satisfied.
How Wage Garnishment Works
Wage garnishment is a legal process whereby an employer is ordered to withhold a certain amount of money from an employee’s wages for the purposes of settling their debts. Garnishment is legally allowed in all fifty states and the District of Columbia. State and local laws may vary slightly, but it is pretty straightforward nationwide.
The process starts by obtaining a legal judgment against the debtor. A judgment is a legal instrument verifying a creditor’s right to collect. From there, the creditor or its collection agency contacts what is known as the ‘levying officer’ – in most states, the local sheriff.
It is the levying officer’s responsibility to serve the garnishment order. The order doesn’t go to the debtor; it goes to the employer. It requires the employer to withhold money from the employee’s wages until the order is lifted. Neither employers nor employees have any say in the matter. A garnishment order is binding so long as certain requirements are met.
Wage Garnishment Requirements
Requirements for garnishing a debtor’s wages are strict but few. For starters, federal law limits the amount of income that can be garnished to the lower of the following two amounts:
- 25% of an employee’s disposable income
- 30 times the minimum wage.
Note that disposable income is defined as that income remaining after all other mandatory deductions are met. Also note that there is an exception for child and spousal support judgments. Creditors can garnish between 50% and 60% of the debtor’s take-home pay if they are behind on support payments by 12 weeks or more.
Here are the requirements for wage garnishment under federal law:
- The debtor must have regular employment income (not self-employment)
- The debtor’s income must exceed the federal poverty level
- The debtor cannot be subject to other wage garnishments (except child and spousal support)
- The debtor’s employment must continue.
These requirements imply that wage garnishment would end if the debtor quit their job. The same could apply during bankruptcy proceedings if the bankruptcy judge allowed for it. And of course, debtors do have the legal right to contest garnishments at any stage.
Obtaining the Necessary Information
In some cases, the biggest impediment to wage garnishment is getting the right information from the debtor. It makes sense that a debtor would immediately supply the relevant information upon having a judgment entered against them. But that’s not always the case. Sometimes creditors have to go to court to force debtors to supply the information.
The good news for creditors is that it is awfully hard to evade judgment collection agencies. For example, Utah-based Judgment Collectors employs a specialized research team capable of tracking down debtors even if they refuse to supply information voluntarily. They can find out where a debtor works fairly easily.
Wage garnishment represents one way to collect on a judgment. It is easy, straightforward, and cheap. Quite often, it is the best way to collect.