The short answer is “No.” Your employer will deduct taxes and other necessary items from your gross wages before subtracting a wage garnishment owed to a creditor. In this article, you’ll learn about the process your employer will use when making your garnishment calculations.
(If you’d prefer to start with the basics, read When Can a Creditor Garnish Your Wages?)
How Much Can a Creditor Take?
The percentage that a creditor can get from your paycheck will depend largely on the type of debt being collected. For instance, in most cases (but not all), a creditor must first go to court and get a court judgment in the amount owed. This type of wage garnishment is usually for things like credit cards and past due medical bills.
Under federal law, an ordinary judgment creditor can take the lesser of:
- 25% of your disposable pay (explained below), or
- the amount that exceeds the federal minimum wage times 30 per week (as of 2017, $7.25 x 30=$217.50).
Keep in mind that the laws in your state might protect even more of your income. For instance, creditors in Texas cannot garnish wages for anything other than child or spousal support (this is an unusual rule).
Special Garnishment Rules
Not all creditors have the same rights when it comes to garnishments. Here are a few notable exceptions:
- Student loans. If you default on a federal student loan, the company responsible for collecting can garnish up to 15% of your disposable wages without taking you to court (a private lender must get a judgment against you).
- Child or spousal support. A creditor with a support obligation can garnish up to 50% of your disposable pay if you are currently married or have children who are not subject to a support order. The amount increases to 60% if you do not currently have a spouse or another child you’re supporting. If your support payments are behind more than 12 weeks, these amounts can increase by an additional 5%.
- Internal Revenue Service (IRS). The IRS can take more from your check than any other creditor. You’ll find a detailed explanation in How Much Can a Creditor Garnish From My Paycheck?
You can take action to stop a garnishment once you receive notice that one is pending. If you need help, an attorney can explain how much your employer will deduct, as well as available options. For instance, you might find out that you can get rid of the debt by filing for bankruptcy.
What Is Disposable Pay?
The garnishment amount will get deducted from a portion of your wages referred to as your “disposable pay”—not your gross income. To arrive at this figure, you’ll subtract out certain things, including:
- federal, state, and local taxes
- Social Security and Medicare deductions
- involuntary retirement contributions (such as a state teacher‘s retirement), and
- health insurance premiums (not including vision and dental).
You don’t get to protect all of your deductions, however—only necessary items. For instance, voluntary payments for things like life insurance, disability insurance, or a 401(k) aren’t deducted before the garnishment percentage.
Example. Suppose that you gross $1,500 per week. Your weekly deductions include $420 in taxes, $114.75 for Social Security and Medicare payments, $50 for your mandatory retirement plan, and $75 for a health insurance premium. Because your total deductions amount to $659.75, your disposable pay will be $840.25. A creditor entitled to a 25% garnishment will receive $210.06, leaving you with $630.19.
Questions for Your Attorney
- How much of my wages can my creditor garnish?
- Is there a way to stop the wage garnishment?
- Does filing for bankruptcy make sense in my case?