One definition of the term “garnish” means to add decorative or savory touches to food, such as using small wooden skewers to present complementary food for entrees. Or using chives to enhance a savory dish.
However, for consumers who have fallen behind on their bills and other financial obligations having your wages garnished is far less palatable. It means someone you haven’t paid has gotten legal authorization to take a bite out of your paycheck.
When your employer receives notice from a court or government agency, the company is obligated to withhold a certain amount of money from your paycheck and send it directly to your creditor. There are different garnishment rules for different types of debt. And there are legal limits covering how much of your wages can be garnished.
Federal and Arizona law place limits on wage garnishment amounts. In the case of nonexempt disposable earnings, creditors can only take the smaller of the following:
“Disposable earnings” are those wages left after your employer has made deductions required by law, such as federal, state, and local taxes, and your share of state unemployment insurance and Social Security, among others.
Let’s look at an example: Say Louise is way past due on the $3,000 she owes Right Way Cleaning Services, and the company obtains a judgment against her for the debt. Louise works at a furniture store and her weekly salary is $850. She also receives $250 a week for child support from her ex-husband. The lender can’t touch the $250 in child support—that’s exempt—but the $850 in wages is fair game. At 25%, the amount taken directly from Louise’s check is $212.50. Ouch!
It would have been wise for Louise to consult with a professional debt settlement company before things got this far. A firm that specializes in the field might have been able to negotiate a settlement with Right Way for, say, 40% of the $3,000 owed, or $1,200. And even after the garnishment has been implemented, debt settlement companies can often convince the creditor to cut the percentage from 25% to 15% by showing that the higher percentage would place an undue hardship on the debtor.
Not all creditors need a court order to garnish your wages. If you owe child support, student loans, or taxes, the government or creditor can garnish your wages without getting a court judgment. The amount that can be garnished is different, too.
You might be embarrassed when your employer receives a notice of garnishment for you. But you can’t be terminated for that reason.
The way to avoid garnishment is to address the debt before it snowballs. A good debt settlement company can work with your creditor to work out a payment arrangement over a period of time, say six months. Or get the creditor accept a percentage of the amount owed to settle the debt.
Bottom line: To avoid having your wages garnished, address your debts before it gets that far.