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Garnishment is a legal process for collecting a monetary
judgment Judgement (or US spelling judgment) is also known as ''adjudication'', which means the evaluation of evidence to make a decision. Judgement is also the ability to make considered decisions. The term has at least five distinct uses. Aristotle s ...
on behalf of a plaintiff from a
defendant In court proceedings, a defendant is a person or object who is the party either accused of committing a crime in criminal prosecution or against whom some type of civil relief is being sought in a civil case. Terminology varies from one jur ...
. Garnishment allows the plaintiff (the "garnishor") to take the money or property of the debtor from the person or institution that holds that property (the "garnishee"). A similar legal mechanism called
execution Capital punishment, also known as the death penalty, is the state-sanctioned practice of deliberately killing a person as a punishment for an actual or supposed crime, usually following an authorized, rule-governed process to conclude that t ...
allows the seizure of money or property held directly by the debtor. Some jurisdictions may allow for garnishment by a tax agency without the need to first obtain a judgment or other court order.


Wages

Wage garnishment, the most common type of garnishment, is the process of deducting money from an employee's monetary compensation (including
salary A salary is a form of periodic payment from an employer to an employee, which may be specified in an employment contract. It is contrasted with piece wages, where each job, hour or other unit is paid separately, rather than on a periodic basis. ...
), usually as a result of a court order. Wage garnishments may 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 Child support (or child maintenance) is an ongoing, periodic payment made by a parent for the financial benefit of a child (or parent, caregiver, guardian) following the end of a marriage or other similar relationship. Child maintenance is paid d ...
* Defaulted student loans *
Tax A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures (regional, local, or ...
es * Unpaid
Court costs Court costs (also called law costs in English procedure) are the costs of handling a case, which, depending on legal rules, may or may not include the costs of the various parties in a lawsuit in addition to the costs of the court itself. In the ...
* Court-ordered judgments When served on an
employer Employment is a relationship between two parties regulating the provision of paid labour services. Usually based on a contract, one party, the employer, which might be a corporation, a not-for-profit organization, a co-operative, or any othe ...
, garnishments are taken as part of the
payroll A payroll is the list of employees of some company that is entitled to receive payments as well as other work benefits and the amounts that each should receive. Along with the amounts that each employee should receive for time worked or tasks pe ...
process. When processing payroll, sometimes there is not enough money in the employee's
net pay In business and accounting, net income (also total comprehensive income, net earnings, net profit, bottom line, sales profit, or credit sales) is an entity's income minus cost of goods sold, expenses, depreciation and amortization, interest ...
to satisfy all of the garnishments. For example, in a case with federal tax, local tax, and credit card garnishments, the first garnishment taken would be the federal tax garnishments, then local tax garnishments, and, finally, 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, and the ability to receive a loan or open a bank account. At present four
U.S. states In the United States, a state is a constituent political entity, of which there are 50. Bound together in a political union, each state holds governmental jurisdiction over a separate and defined geographic territory where it shares its ...
Pennsylvania Pennsylvania (; (Pennsylvania Dutch: )), officially the Commonwealth of Pennsylvania, is a state spanning the Mid-Atlantic, Northeastern, Appalachian, and Great Lakes regions of the United States. It borders Delaware to its southeast, ...
,
North Carolina North Carolina () is a state in the Southeastern region of the United States. The state is the 28th largest and 9th-most populous of the United States. It is bordered by Virginia to the north, the Atlantic Ocean to the east, Georgia and ...
,
South Carolina )'' Animis opibusque parati'' ( for, , Latin, Prepared in mind and resources, links=no) , anthem = " Carolina";" South Carolina On My Mind" , Former = Province of South Carolina , seat = Columbia , LargestCity = Charleston , LargestMetro = ...
, and
Texas Texas (, ; Spanish language, Spanish: ''Texas'', ''Tejas'') is a state in the South Central United States, South Central region of the United States. At 268,596 square miles (695,662 km2), and with more than 29.1 million residents in 2 ...
—do not allow wage garnishment at all except for tax-related debt, child support, federally guaranteed student loans, and court-ordered fines or restitution. The federal garnishment limit (with some exceptions like child support and student loans) on a weekly basis is the lower of (A) 25% of one's disposable earnings (what's left after mandatory
tax deductions Tax deduction is a reduction of income that is able to be taxed and is commonly a result of expenses, particularly those incurred to produce additional income. Tax deductions are a form of tax incentives, along with exemptions and tax credits. T ...
), or (B) the total amount by which one's weekly wage exceeds thirty times the federal hourly minimum wage. Several other states observe maximum thresholds that are lower than the maxima provided by federal law. States may also prohibit garnishment altogether in certain circumstances. For example, in
Florida Florida is a U.S. state, state located in the Southeastern United States, Southeastern region of the United States. Florida is bordered to the west by the Gulf of Mexico, to the northwest by Alabama, to the north by Georgia (U.S. state), Geo ...
the wages of a person who provides more than half the support for a child or other dependent are exempt from garnishment altogether (though this is subject to
waiver A waiver is the voluntary relinquishment or surrender of some known right or privilege. Regulatory agencies of state departments or the federal government may issue waivers to exempt companies from certain regulations. For example, a United S ...
). Loans and negotiations with creditors can also help debtors to avoid wage garnishment. In Minnesota, there are five limits on wage garnishment: Creditors cannot garnish wages for social security benefits, retirement benefits, welfare payments, workers' compensation benefits, or income associated with disability or unemployment insurance. In many states when the person is an employee or appointee of a governmental unit the writ is called a Writ of Sequestration. These are processed by the courts in the same manner as garnishments and are subject to the same wage exemptions. In the United States, firing an employee to avoid handling a levy may be a criminal offense. Federal law provides for a fine of up to $1,000 and imprisonment for up to one year on an employer who willfully fires an employee in connection with a garnishment of the employee's earnings.


Attachments

The other type of garnishment, also known as ''attachment'' (or
attachment of earnings Attachment of earnings is a legal process in civil litigation by which a defendant's wages or other earnings are taken to pay for a debt. This collections process is used in the common law system, especially Britain and the United States, but in o ...
), requires the garnishee to deliver all the defendant's money and/or property in the hands of the garnishee at the time of service of process to the court, to be paid over to the plaintiff. Since this type of garnishment is not continuing in nature, but is not subject to the type of restrictions that apply to wage garnishment, it is most often used against banks, or other persons or companies that incur liquidated obligations in the regular course of business. The garnishment should not begin during the pay period but instead on the following pay period.


Federal taxes

Under U.S. federal tax law, a garnishment by the
Internal Revenue Service The Internal Revenue Service (IRS) is the revenue service for the United States federal government, which is responsible for collecting U.S. federal taxes and administering the Internal Revenue Code, the main body of the federal statutory tax ...
(IRS) is a form of administrative levy. In the case of an IRS levy, no court order is required.See ; ''United States v. Rodgers'', 461 U.S. 677, 103 S. Ct. 2132, 83-1 U.S. Tax Cas. (CCH) paragr. 9374 (1983) (''dicta''); ''Brian v. Gugin'', 853 F. Supp. 358, 94-1 U.S. Tax Cas. (CCH) paragr. 50,278 (D. Idaho 1994), ''aff’d'', 95-1 U.S. Tax Cas. (CCH) paragr. 50,067 (9th Cir. 1995). Only a few requirements must be met before the IRS starts a wage garnishment: * The IRS must have assessed the tax and must have sent a written Notice and Demand for Payment; * The
taxpayer A taxpayer is a person or organization (such as a company) subject to pay a tax. Modern taxpayers may have an identification number, a reference number issued by a government to citizens or firms. The term "taxpayer" generally characterizes o ...
must have neglected or refused to pay the tax within the time prescribed in the notice; and, * The IRS must have sent a Final Notice of Intent to Levy and Notice of Your Right to A Hearing (levy notice) at least 30 days before the levy. The IRS may serve the Final Notice in person, may leave the notice at the taxpayer's home or usual place of business, or may send it to the last known address by certified or registered mail. The IRS is required to send the Final Notice to the last address known to the agency. The taxpayer does not need to actually receive the notice for the notice to be effective. Many taxpayers never actually receive the final notice. Those taxpayers may not realize they are in danger of receiving a levy until their wages are actually garnished.


See also

*
Attachment of earnings Attachment of earnings is a legal process in civil litigation by which a defendant's wages or other earnings are taken to pay for a debt. This collections process is used in the common law system, especially Britain and the United States, but in o ...
*
Collections Collection or Collections may refer to: * Cash collection, the function of an accounts receivable department * Collection (church), money donated by the congregation during a church service * Collection agency, agency to collect cash * Collecti ...
*
Distraint Distraint or distress is "the seizure of someone’s property in order to obtain payment of rent or other money owed", especially in common law countries. Distraint is the act or process "whereby a person (the ''distrainor''), traditionally eve ...
*
Judgment (law) In law, a judgment, also spelled judgement, is a decision of a court regarding the rights and liabilities of parties in a legal action or proceeding. Judgments also generally provide the court's explanation of why it has chosen to make a particula ...
*
Student loan default in the United States Defaulting on a loan happens when repayments are not made for a certain period of time as defined in the loan's terms of agreement, typically a promissory note. For federal student loans, default requires non-payment for a period of 270 days. For p ...
*
Tax refund interception A tax refund interception, also referred to as a tax refund offset, is the act of an agency responsible for sending tax refunds using all or part of a refund to fulfill an obligation of the taxpayer rather than sending the money to the taxpayer him ...
* Unreported employment *
Sequestration (law) In law, sequestration is the act of removing, separating, or seizing anything from the possession of its owner under process of law for the benefit of creditors or the state. Etymology The Latin ''sequestrare'', to set aside or surrender, a late ...


References

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