 One
method that creditors may use to collect judgments is to garnish the
debtor's wages. As a result of a garnishment, the employer must pay part
of the debtor's wages directly to the creditor rather than the employee.
Garnishment causes two major problems: debtors often are left without
enough money to meet basic needs, and they may lose their jobs because
employers tend to dislike the trouble involved in garnishment.
Amount
Under federal law, total garnishment from individual wages cannot
exceed the lesser of:
• Twenty-five percent (25%) of his or her net earnings per week after
deductions of federal and state taxes;
• That portion of the debtor's net wage that exceeds 30 times the federal
minimum hourly wage.
Federal law provides that state garnishment laws that are more liberal to
the debtor should be applied. Federal law supersedes all state exemptions
that offer less protection to debtors than federal law.
States may exempt a fixed amount, a percentage or a percentage qualified
by a minimum amount or both. State special exemptions may include items
that add or reduce general exemptions. They are fixed amounts or are
percentages and related to specific employments and debts such as family
support orders, necessities and taxes. Certain family support obligations
and other liabilities are excluded from debtor's exemption rights.
Loss of Employment
Federal law provides that no employer can discharge an employee
because of garnishment if it resulted from a single indebtedness. It does
not prevent a firing if two different creditors garnish the debtor.
Violators are subject to a fine up to $1,000, imprisonment or both. Some
states offer greater protection than the federal law.
Procedure for Claiming Exemptions
The procedure for claiming exemptions varies from state to state.
Generally, when the employer receives the notice of garnishment, the
debtor can file for exemptions beyond the federal and state standard
amounts. A hearing usually is held where the court examines the debtor as
to the applicability of the exemptions.
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