Wage garnishment is a scary thing because it means that a creditor can have issued an order that says a certain percentage of your wages can be withheld by the creditor in order to pay off a debt.
Up to 25% of your wages can be withheld to pay off a debt and, in some cases, a creditor could take even more.
When Is It Legal For A Creditor To Garnish Your Wages?
Most creditors are unable to garnish wages unless they have a judgment from the court that says you owe the money. For instance, you may be behind on a credit card payment or owe a medical bill. Those creditors have to sue you before they can garnish your wages because they need the judgment to do so. But there are some cases when your wages can be garnished without the court being involved. Those cases are:
- Unpaid income taxes
- Child support arrears
- Court ordered child support
- Delinquent student loans
The good news is that there are limits as to how much money can be garnished from a paycheck. The idea is that you should still be able to pay your living expenses, while paying the debt. Although the government wants creditors to get their money, they don’t want that to encroach on your ability to pay your everyday expenses. So the guideline is that the wage garnishment can be up to 25% of your disposable earnings or the amount by which your disposable earnings are more than 40 times the federal minimum wage.
Disposable earnings are defined as those wages left after your employer has made deductions, such as taxes, insurance, and retirement accounts.
If the debt that is owed is child support, taxes, or student loans, then up to 60% of your earnings can be garnished. If child support payments are over 12 weeks in arrears, another 5% can be deducted. The exact amount garnished for taxes depends on the number of dependents and the deduction rate.
Are Multiple Garnishments Possible?
If you have more than one wage garnishment, the deduction limit remains the same at 25% of disposable income or 40 times the federal minimum wage. For example: if you have one garnishment for 20%, another creditor can garnish for up to 5%.
Can This Hurt Your Job?
Employers don’t like to deal with wage garnishments because they are a hassle. There are times that employers may be inclined to terminate an employee because their wages are being garnished so that they don’t have to comply with the court order. The good news is that Minnesota law and federal law protects you against job loss due to wage garnishment.
Federal law states that your employer cannot discharge you if you have a single wage garnishment. However, the law doesn’t protect you if more than one is in place. While some states have additional protections, Minnesota law doesn’t specify how many garnishments are allowed before there is no protection.