The Basics Of Wage Garnishment

Many people experience the trouble caused by wage garnishment. Not much is known about wage garnishment and many people may be living through it without really knowing much about the process. Although filing for bankruptcy can stop a wage garnishment, it is also possible to avoid a garnishment by getting educated about the process.

Ins And Outs

Typically, a wage garnishment order is a last resort collection method for a creditor. However, once a creditor begins the process to pursue wage garnishment, the debtor may not find out until their money is already being garnished.

It is important to note that there are several rules governing the garnishment process. First, the creditor must obtain a court order before any wages can be garnished. This order is provided to a debtor’s employer. The employer can only provide the specified amount of funds to the creditor listed on the garnishment order. Generally, the order caps the garnishment at no more than 25 percent of the debtor’s income for that pay period.

A copy of the garnishment order is also provided to the debtor’s bank. The bank is required to review the debtor’s account within two days of receiving the order. The account review is used to determine if there are any funds that are to be exempt from garnishment. In general, federal benefits are exempt from garnishment, but only if they are direct deposited into the debtor’s account. Other funds that are exempt from garnishment are Social Security benefits, Veteran’s benefits, Railroad employee systems benefits, Federal employee benefits and other government personnel benefits.

Exceptions to fund exemptions include garnishment order issued for back due child or spousal support payments, back due taxes or IRS levies.