Wage garnishment occurs when your employer or bank are legally required to withhold your earnings to settle an outstanding debt.
This debt is often child support, unpaid taxes or student loans, but garnished wages can also be used to pay outstanding medical bills or credit card balances. The process often involves creditors filing suit and getting a court order, but not always, as is the case when who you owe is the Internal Revenue Service (IRS).
Read on to learn more about wage garnishment and how it works.
Table of Contents
How does wage garnishment work?
IRS and wage garnishment
Wage garnishment by creditors
Types of wage garnishment
Types of income subject to wage garnishment
How much of your disposable income can be garnished
What to do when you receive a wage garnishment notice
Wage garnishment FAQs
Wage garnishment is a debt collection process used by either the IRS or private creditors when they believe there’s no other way of getting what they’re owed.
This process is overseen by the U.S. Department of Labor, agency that ensures Title III of the Consumer Credit Protection Act (CCPA) is followed. Title III limits how much of an individual’s disposable income can be garnished and prevents employers from firing employees that have a garnishment order against them to repay a debt.
Having your wages garnished not only affects your finances, it can also impact your credit score and make improving your credit all the harder.
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