What is it a Wage Garnishment?
Technically, a garnishment is a document issued by some kind of legal authority (such as a court or administrative panel) that tells a law enforcement officer, such as a sheriff or constable, to require your employer to turn over a part of your wages to pay a debt. In most areas of the US, garnishment is a term that only applies to WAGES and occurs as a result of a judicial decision or Court Judgment. An order to take your bank accounts or other property is usually called ATTACHMENT. A government related debt, such as a tax debt, publicly insured student loan, or child support enforcement may not require a Court order, but will follow an administrative process.
An employer has no option but to comply with a garnishment. If an employer were to ignore the garnishment, the garnishment could become the debt of the employer.
How much can they take in a garnishment?
State laws specify how much of your pay a creditor can take. In Nevada, that amount is 25% of the gross (before tax) wage, and 25% is typical throughout the US. In some states, you can apply to the Court for a reduced percentage of your income to be garnished, and there are a variety of reasons to make this application. But in Nevada, no such laws exist to reduce a garnishment from 25%, other than requiring that you must make at least $362.50 a week (if your employer provides you with medical insurance) or $412.50 (if your employer does not provide you with medical insurance). If two creditors are trying to garnish you, the one that delivered the paperwork to your employer first will get paid first. The garnishment will continue for several weeks so expect to lose money paycheck after paycheck until either the entire amount of the court judgment is paid off or the garnishment order expires. When the garnishment order expires, it is a simple matter for the creditor to obtain a new wage garnishment and begin the process all over, unless the debt has been fully paid.
How bad is a wage garnishment?
Probably the worse thing about a wage garnishment is all those things you don’t know about and don’t understand. The money coming out of your paycheck doesn't all go towards reducing the amount you owe to the creditor. Your employer receives a fee for the extra accounting work involved with a wage garnishment. Law enforcement receives a fee for delivering the paperwork to your employer, and law enforcement also receives a commission from your wage garnishment. Your employer and law enforcement get paid before one dime of the court judgment is paid down. After these expenses are paid, you pay down the portion for “administrative expenses.” So what is that? Well, the always important legal fees and court costs.
After that, you might assume the judgment gets paid down. You would be wrong. Interest on the judgment gets paid next, and in the meantime, depending on the size of the judgment, the interest may be growing faster than the amount that gets applied to the account.
What is the dollar cost of a wage garnishment?
If you earn $800 a week, which is $20/hour, a wage garnishment can cost you $200/week. So if you are paid bi-weekly, or every two weeks, in this example, your pay will be short by $400 as a result of a garnishment. But wait, there is a catch, good for people who are at a low income amount. As stated above, in Nevada, if you make less than $412.50 per week or less, your wages may not be available to be garnished. But this amount could be less ($362.50 per week) if your employer provides you with medical insurance coverage.
How can you end a wage garnishment?
The best way would be to never get your wages garnishment in the first place. When someone sues you in court, working out payment arrangements with the creditor or challenging the lawsuit in court is a way to prevent a wage garnishment. Another solution is to attempt to settle the lawsuit with a lump sum of cash before it turns into an ugly court judgment.
But if it is too late to prevent a wage garnishment, and if the court judgment is large, or if the judgment added to other debts makes the total amount of your debts overwhelming, bankruptcy laws can solve the problem. Bankruptcy is appropriate when the total amount of debt eligible to be eliminated is more than $20,000. With smaller amounts of debt, the solutions are limited to finding a way to make the creditor work with you to pay this debt off.