Wage garnishment, the most common type of garnishment, is the process of
deducting money from an employee's wages as a result of a court order. Wage garnishments continue until the entire
debt is paid or arrangements are made to pay off the debt. Garnishments can be taken
for any type of debt but common examples of debt that result in garnishments include:
- child support
- student loans
- taxes
- credit card and medical bills
When served on an employer, garnishments are part of the payroll process.
When processing payroll, sometimes there is not enough money in the employee's
net pay to satisfy all of the garnishments. For example, in a case with
tax, and credit card garnishments, the first garnishment taken would
be the tax garnishment, then garnishments
for the credit card. Employers receive a notice telling them to withhold a certain
amount of their employee's wages for payment and cannot refuse to garnish wages.
Employers must correctly calculate the amount to withhold and must make the deductions
until the garnishment expires.
Wage garnishment can negatively affect credit, reputation with
a employer, and the ability to receive
a loan or open a bank account.
The garnishment limit (with some exceptions like child support and
taxes) is 25% of the employee's disposable earnings (what's left after mandatory
deductions).
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