Garnishment of wages comes in two forms; "Court Ordered
Garnishment and a Money Judgment has been granted" and "Administrative Wage
Garnishment.
Court Ordered Garnishment : This type of
garnishment includes wages, bank accounts and other assets. A court order
directing a party holding funds (such as a bank) or about to pay wages (such as
an employer) to an alleged debtor to set that money aside until the court
determines (decides) how much the debtor owes to the creditor. Garnishing funds
is also a warning to the party holding the funds (garnishee) not to pay them,
and to inform the court as to how much money is being held. If the garnishee
(such as a bank or employer) should mistakenly give the money to the account
owner or employee, the garnishee could be liable to pay the creditor what
he/she/it has coming.
Garnishing wages is a typical means used to collect child
support, alimony payments and money judgments. In some states, installment
payments are made to the sheriff and the sheriff then gives the payments (or
entire amount if all at once) to the person to whom the money is owed.
See Federal Wage
Garnishment Law
See Wage
Garnishment Amounts by State
See Examples of Wage Garnishments
Administrative Wage Garnishment (AWG): Used as
a last resort by the U.S. Department of Education (DoE) to recover defaulted
student loans. Thirty (30) days prior to the issuance of the "Order of
Withholding", a notice is sent to students advising them of the department's
intent to garnish wages. This notice also contains your rights and appeal
procedures. Student
Loan Garnishment
For in-depth information on How to Garnish or How the
Garnishment process works see wage
and bank account garnishment actions
Social Security and Garnishment:
Generally,
Social Security benefits are exempt from execution, levy, attachment,
garnishment, or other legal process, or from the operation of any bankruptcy or
insolvency law. The following benefits are exceptions and subject to
garnishment:
(1) to the authority of the Secretary of the Treasury to make
levies for the collection of delinquent Federal taxes and under certain
circumstances delinquent child support payments; and
(2) to garnishment or similar legal process brought by an
individual to enforce a child support or alimony obligation.
Section 207 of the Social Security Act provides: "The right of
any person to any future payment under this title shall not be transferable or
assignable, at law or in equity, and none of the moneys paid or payable or
rights existing under this title shall be subject to execution, levy,
attachment, garnishment, or other legal process, or to the operation of any
bankruptcy or insolvency law."
However, section 6331 of the Internal Revenue Code of 1954 (26
U.S.C. 6331) which was enacted into law on August 16, 1954, after the enactment
of section 207, gives the Secretary of the Treasury the right to levy or seize
for collection of delinquent Federal taxes, property, rights to property,
whether real or personal, tangible, or intangible and the right to make
successive levies and seizures until the amount due, together with all
expenses, is fully paid. References: SSR 79-4: SECTIONS
207, 452(b), 459 and 462(f) (42 U.S.C. 407, 652(b), 659 and 662(f)) LEVY AND
GARNISHMENT OF BENEFITS 20 CFR 404.970 SSR 79-4
See the code here
Special Note:
The Social Security Administration
(SSA) recently changed it's rules to allow the collection of overdue Program
and Administrative Debts using Administrative Wage Garnishment !
The regulations dealing with the collection of program
overpayment debts that arise under titles II and XVI of the Social Security Act
(the Act) and administrative debts owed to the SSA have been modified.
Specifically, the change establishes new regulations on the use of
administrative wage garnishment (AWG) to collect such debts when they are past
due. AWG is a process whereby the SSA orders the debtor's employer to withhold
and pay the SSA up to 15 percent of the debtor's disposable pay every payday
until the debt is repaid.
The employer is required by law to comply with the AWG order.
These new rules are effective January 22, 2004. (References: SOCIAL SECURITY ADMINISTRATION 20 CFR Parts 404, 416
and 422 RIN 0960-AE92 Federal Old-Age, Survivors, and Disability Insurance and
Supplemental Security Income
Read the full text of the Debt Collection Improvement Act
http://www.fms.treas.gov/debt/dmdcia.txt
Bank accounts can be garnished and, when they are, it is almost
always a surprise to the debtor. What typically happens is collectors obtain
money judgments (usually by default) and then use the judgment to freeze the
funds in your bank account. State law and banking rules govern how the bank
must handle the garnishment process.
Collectors always notify the bank first and then notify the
debtor. This way your funds are frozen before you can take any action such as
withdrawing all your funds. Notifying the bank first is perfectly legal. You
typically receive the notice (including your rights) a day or two after your
funds have been frozen.
In most states, the garnishment can only freeze funds already
in your account at the time of service on the financial institution. During the
time the garnishment is in effect, the financial institution cannot honor
checks or other orders for the payment of money drawn against your account.
This means any outstanding checks will more than likely bounce or be returned
for NSF. The exception to this rule is if your account has more on deposit than
the amount of the garnishment. In this case, the bank can honor checks up to
the amount that will reduce your funds below the amount of the garnishment.
When the amount being garnished is paid, the freeze on your account must be
terminated.
Federal law limits the maximum amount that can be garnished by
one or more garnishment orders to 25 percent of your disposable earnings for
that week, or the amount by which disposable earnings for that week exceed
thirty times the Federal minimum hourly wage, whichever is
less.
Example using minimum wage
Weekly earnings: $206 ($5.15 x 40 hours)
Disposable income: $175 ($206 x .85) some states use
.75
Disposable income above the federal minimum ( $154.50) that
can be garnished: $20.50 ($175 - $154.50 = $20.50)
Total amount of garnishment per week: $5.15
($20.60 x .25 = $5.15)
Example using a higher wage
Weekly income: $360 ($9.00 x 40 hours)
Disposable income: $306 ($360 x .85 ) some states use
.75
Disposable income above the federal minimum ( $154.50) that
can be garnished: $151.50 ($306 - $154.50 = 151.50)
Total amount of garnishment per week $37.87
($151.50 x .25 = $37.87)
WARNING: The above are general examples, ALWAYS
check your State
Wage Garnishment and Attachment Rules to be sure you are figuring
the correct amount.
As of April 2005, the federal minimum wage is $5.15 however
there are states with lower minimum wages as of April 2005:
States with Higher Wages: Washington,
Oregon, California, Maine, Vermont, New York, Massachusetts, Connecticut, Rhode
Island, Delaware, Alaska and Illinois.
States with lower minimum wages: Kansas and
Ohio
States with no minimum wage law: Arizona,
Louisiana, Mississippi, Alabama, Florida, South Carolina and Tennessee "
There are four exceptions to the 25 percent
rule:
Child support or alimony orders;
Orders of any court of the United States having jurisdiction
over cases under chapter 13 of title 11;
Any debt due for any State or Federal tax; and
Defaulted student loans.
