If a judgment creditor files for a wage garnishment against you, it may be limited in how much it can take from your wages. That is because most of your wages may be protected from garnishment under the federal Consumer Credit Protection Act (CCPA). The laws of your state may offer even greater protection. Read on to learn more.
What Is Wage Garnishment?
In certain circumstances, a creditor can get a court order which directs your employer to withhold money from your paycheck. The employer sends the money to the court clerk, who distributes it to your creditor.
Most creditors must first sue you in court and obtain a money judgment against you before garnishing your wages. A few special creditors can garnish your wages without first getting a judgment. Those include child support creditors, taxing authorities, and the federal government (or its servicer) when collecting student loans.
Federal Limits on Wage Garnishment Amount: Wage Exemptions
You are usually entitled to exempt (or keep) a good portion of your wages from garnishment under federal law and most state laws. Exemptions can be use to protect some or all of your income against claims by your creditors.
Federal Exemptions: The CCPA
The Consumer Credit Protection Act (CCA) limits the amount of earnings that a judgment creditor can garnish from you per week or pay period. Earnings that are subject to protection under the CCPA include wages, salaries, bonuses, commissions, and even pension and retirement income.
A judgment creditor can only garnish the lesser of:
- 25% of your disposable earnings, or
- your weekly disposable earnings less 30 times the federal minimum wage (currently $7.25 per hour).
What Are Disposable Earnings?
Under the CCPA, “disposable income” means your gross pay less taxes and mandatory deductions. Mandatory deductions are those that the employer is legally required to withhold from your paycheck, such as social security and federal, state, and local taxes. Mandatory dedutions do not include withholdings for insurance, 401(k) and other pension or savings plans that are not required by law, loan repayments, and charitable contributions
How to Calculate Your Wage Exemption Under CCPA
If you earn $217.50 a week or less, a judgment creditor cannot garnish any of your wages under the CCPA. That is because you do not meet the minimum amount for a garnishment to occur: 30 x $7.25 = $217.50. If you earn more than $217.50 in disposable weekly earnings, then you could be subject to garnishment.
Exceptions to the CCPA Limits
CCPA exemptions do not apply if you are being garnished for certain types of debt. If you owe child or spousal support, between 50% and 60% (or more) of your earnings may be garnished, depending on whether you are also supporting additional family members.
You are also not entitled to exemptions under the CCPA for federal, state, or local taxes. The IRS will garnish you for any amount over what it determines you need to pay for basic daily living necessities, and is calculated based on the amount of tax exemptions you can claim. For more information, read the IRS table.
If you owe student loans or other non-tax federal debts, garnishments for those debts are subject to different limits under different federal laws. You can only be garnished up to 15% of your disposable income for non-tax federal debts under the Debt Collection Improvement Act. You can only be garnished up to 10% on defaulted student loan debts owed to the federal government under the Higher Education Act.
State Limits on Wage Garnishment
The laws of your state may offer you even more protection than the CCPA. The amount of that protection varies among the states. Some states offer no more protection than what the CCPA provides. Other states, like Illinois, limit wage garnishments to no more than 15% of disposable income. Still other states, like Pennsylvania and North Carolina, may fully protect your earnings from garnishment, except for certain debts like child support and student loans. If you live in a state that offers head of household exemptions, you could protect up to 90 to 100% of your earnings.
You can find the wage garnishment limits in each of the 50 states on Nolo's Wage Garnishment topic page.