The Wage Garnishment Process and Collections: Can a Debt Collector Garnish Wages Over an Unpaid Debt?

Wage garnishment is a very real fear for many individuals who owe debts that they are currently unable to pay. Laws are in place, however, to protect consumers from losing too much disposable income to garnishment.

What Is Wage Garnishment?

Wage garnishment occurs when an individual is sued for a debt and either loses the case or does not appear in court. This results in a judgment being levied against the consumer. When this happens, the creditor in the case may request a writ of garnishment. The writ of garnishment is a legal document that is forwarded to the debtor's employer requiring the employer to withdraw a certain amount of the debtor's disposable income from each paycheck and turn the money over to the creditor until the debt has been paid.

Can a Debt Collector Garnish Wages?

A debt collector or collection agency is legally entitled to sue for any legitimate debt that is in collections and request a writ of garnishment. If an individual chooses to fight the lawsuit, the collection agency will be responsible for proving that the consumer owes the debt. In many cases this simply is not possible and the lawsuit will be dropped or the consumer will win. A collection agency cannot request a writ of garnishment if the lawsuit is dropped or lost. In addition, if an individual is currently unemployed, he or she cannot be subjected to wage garnishment since wages are not being received. Not every state permits wage garnishment for unpaid debts to any entity other than the federal government.

Income That Cannot Be Garnished By a Collection Agency To Collect a Debt

Only some forms of income can be intercepted by a collection agency or debt collector when a writ of garnishment is awarded. If a consumer's income is considered exempt by the government, it will not be garnished. Forms of income that are exempt to garnishment by a debt collector are:

• Retirement pensions (depending on state of residence)

• Social Security and Social Security Disability payments

• All forms of welfare and government assistance

• Tips

• Any amount greater than the maximum legal amount of disposable income

How Much Can a Debt Collector Garnish?

After winning a judgment and requesting a writ of garnishment, a debt collector or collection agency is still limited in the amount of money it can garnish from a consumer's paycheck. The allowable garnishment amounts are regulated by Title III of the Consumer Credit Protection Act. The amount to be garnished is calculated one of two ways:

1. Any amount of the individual's paycheck that surpasses the current federal minimum wage multiplied by 30.

2. 25% of the individual's total earnings

   
   

Whichever of these conditions is less will dictate the amount available for garnishment. In the event that the first condition is not met and the consumer's income does not exceed 30 times the federal minimum wage, garnishment will not occur.