Wage garnishment is a process that allows a creditor or lender to take a portion of a borrower's wages in order to pay off an existing debt. Wages that are garnished are paid directly to the lenders by the employers. A court order is served to the debtor's employer and this is where the amount of wage garnishment is based on. Debts that are owed to federal agencies (unpaid taxes, student loans) are usually recovered through an administrative garnishment which is a type of debt collection that doesn't require a court order.
However, The CCPA or the Consumer Credit Protection Act has set limits on just how much money should be garnished from your pay check. For consumer debt, the federal limit deducts twenty five percent of the disposable income or any amount that is in excess of thirty times the minimum wage set by the federal government. So say for example that an employee with wages at $500 a week is subject to a weekly wage garnishment of twenty five percent or $125 every week. A person with a net weekly wage of $300 is subject to wage garnishment of $82.50 which is the amount of the weekly wages which exceeds thirty times the federal minimum wage.
It is the CCPA that sets the maximum amount of permissible amounts for wage garnishments. It does not however, prevent or stop each state from protecting their citizens from very high percentages of wage garnishment. There are some states that protect its citizens by allowing to set lower limits on the percentages of the weekly or monthly income that is subject for wage garnishment. For specific states, Pennsylvania, Texas, North Carolina and South Carolina stop or prohibit wage garnishment for people who have consumer debts. However, wage garnishment is still available for non consumer debts like alimony (spousal support) as well as child support.
Read more information at LoanSafe.org
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