Garnishment

Definition

Garnishment is a legal mechanism used by creditors to collect debts from debtors who have not voluntarily paid what they owe. It involves obtaining a court order that requires a third party (such as an employer or bank) to withhold a portion of the debtor’s wages, salary, or bank account funds, and direct that money toward satisfying the debt.

Examples of Garnishment:

1. Wage Garnishment: John has an overdue credit card debt, and the creditor has obtained a court order to garnish 25% of his wages directly from his employer.
2. Bank Account Garnishment: Sarah owes back taxes; as a result, the tax authority freezes her bank account and withdraws funds to cover the debt.

Frequently Asked Questions

1. What types of debts can be subject to garnishment? Garnishment can apply to a variety of debts, including child support, alimony, unpaid court fines, student loans, and unpaid taxes.

2. How much of my wages can be garnished? Under federal law, the limit is generally up to 25% of your disposable earnings or the amount by which your weekly earnings exceed 30 times the federal minimum wage, whichever is less. Some states have stricter limits.

3. Can all forms of income be garnished? No, certain types of income are typically exempt from garnishment, such as Social Security benefits, veterans’ benefits, and certain types of retirement benefits.

4. How will I know if my wages will be garnished? You will be notified through a court proceeding. You should receive a notification from the creditor as well as a copy of the court order.

5. Can I object to a garnishment? Yes, you can challenge a garnishment order by filing a claim of exemption with the court. You must provide evidence showing that the garnishment is causing financial hardship or that the funds are exempt.

Related Terms

• Creditor: An entity or person that extends credit, by giving another entity or person permission to borrow money intended to be repaid in the future.

• Debtor: A person or entity that owes money to another party (the creditor).

• Disposable Earnings: The portion of an employee’s earnings left after mandatory deductions like taxes and Social Security have been taken out.

• Bank Levy: A legal process in which a creditor can take funds directly from a debtor’s bank account to satisfy a debt, typically used by tax authorities.

Online References

• U.S. Department of Labor - Wage Garnishment
• Consumer Financial Protection Bureau - Understanding Garnishments
• Internal Revenue Service (IRS) - Levy

Suggested Books for Further Studies

1. “Creditors’ Rights and Remedies” by William A. Drennan
2. “Consumer Rights: A Reference Handbook” by Margaret Jasper
3. “The Debt Collector’s Handbook: Collecting Debts, Finding Assets & Using Leverage” by David Lambert

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