Wage garnishment refers to the removal of funds, usually by court order, from an employee’s paycheck to meet certain financial obligations. The degree to which garnishing is legal depends upon country and also in the US upon each state. While all states have provisions for certain types of wage garnishment, as for example to pay child support or taxes, only certain states allow wages to be reduced for other things like to pay money owed to lenders or money owed in civil court cases.
All US companies have to comply with requests for wage garnishment, and these most often come from family courts or state agencies like the Internal Revenue Service. Unpaid student loans also frequently come under this heading. Wages may be reduced by certain percentages, and in some cases by as much as half the paycheck. Instead of allowing the employee to cash a full paycheck and repay debts, usually the company that employs the person removes the appropriate amount, sends it to the right person or agency, and then makes out a check to the employee for the remainder.
Obviously avoiding garnishment is a good goal, but this may mean being able to form reasonable settlements with anyone to whom a person owes money. Common reasons why wage garnishment for things like child or spousal support occur is because the person has demonstrated in the past that they are unwilling to meet payments as ordered by the court. The court must order money be directly taken from a paycheck, since likelihood of compliance with support payments is low.
While it’s important to avoid wage garnishment by making arrangements or complying with court orders, it’s also very important that people do not try to avoid having their paychecks reduced by working illegally. Sadly some people do work under the table, where they have no record of being paid, to avoid experiencing garnishment. This may only lead to more fines, and in some cases might lead to seizure of property if money cannot be found.
Another way people can stop some wage garnishment attempts is by filing bankruptcy. This will usually only work to satisfy private debts from creditors. It doesn’t work with student loans, and bankruptcy does not prevent many people from continuing to pay child support. However, if massive credit card debts are being collected through garnishment it may be one way to get out of the constant payments and end debt obligations.