Wage Garnishment : Definition | Example | Types | How to stop?

Wage Garnishment Meaning

Wage garnishment is a legal process where a court issues an order to an employer to withhold a specific amount of an employee’s salary. This money is send to the creditors or whoever the employee owes until the debt is pay. So, This process is done as a result of a court order, and the amount that can be adorn is limit by law. Garnishment can occur for unpaid taxes, defaulted student loans, and due child support or alimony, among other debts. So, Many employers use payroll software to organize and manage wage garnishments.

Wage Garnishment Definition

Wage garnishment is a process that involves an employer withholding a part of an employee’s earnings to repay a debt that the employee owns.

So, it means “This can happen as a result of a court order, and the amount that can be garnished is typically limited by law.”

Types of Garnishment of wages

• • Wage Garnishment: A legal process where creditors can request your employer to withhold a part of your wages to pay off debts.

• • Non-Wage Garnishment: Also known as a bank levy. So that, this process allows creditors to take funds from your bank account to pay off debts.

Wage Garnishment Examples

To help you understand how wage garnishment works. Let’s take a look at some examples using the current federal minimum wage of $10 per hour.

Example 1: An employee’s gross earnings for a particular week are $400. After deductions required by law, the disposable earnings are $360. This week, $43.75 may be garnish, because only the amount over $316.25 may be garnish where the disposable earnings are less than $450.

Example 2: An employee receives a bonus in a particular workweek $600. After deductions required by law, the disposable earnings are $540. This week, 25% of the disposable earnings may be garnish. ($540 x 25% = $135).

Example 3: An employee paid every other week has disposable earnings of $700 for the first week and $100 for the second week of the pay period, for a total of $800. In a biweekly pay period, when disposable earnings are at or above $800 for the pay period, 25% may be garnish; $200 (25% x $800) may be garnish. It does not matter that the disposable earnings in the second week are less than $316.25.

It’s important to note that these examples are base on the current federal minimum wage of $10 per hour. But, laws and limits can vary by state. If you are facing wage garnishment, it’s important to understand the laws in your state and your rights as an employee.

Additionally, you should communicate with your creditors and consider seeking professional help if necessary, such as reaching out to a credit counseling agency or considering filing for bankruptcy.

Which wages can be garnished?

Most types of wages are subject to garnishment, including:

• • Hourly wages

• • Salaries

• • Bonuses

• • Commissions

Tip income, but, is generally exempt from garnishment.

It’s important to note that only an employee’s disposable earnings can be garnish. Disposable earnings are calculate by subtracting required deductions such as federal, state. And local taxes from an employee’s wages. It’s important not to subtract non-required deductions. Such as health and life insurance, and retirement plan contributions when calculating disposable earnings. This means that an employee’s disposable earnings and net pay may be different amounts.

How can I stop a Wage Garnishment Immediately?

If your wages are being garnish by creditors, you can put a stop to it by filing for bankruptcy. By doing so, you may even be able to recover wages that have already been garnished. However, it’s important to keep in mind that each situation is unique. So, it’s best to speak with a lawyer or financial advisor to determine the best course of action for you. Some alternatives to bankruptcy include requesting a hearing with the court or agency that issued the garnishment order. Negotiating a payment plan with your creditor, or paying off the debt in full.