A  Debtor’s Guide to Garnishment Withholding

April 2025
Thomas Fox, J.D.
thomas@foxparalegalservices.com
TEXT ONLY: 502-230-1613

Lawyers tend to go where the money is and debtors in serious financial difficulty can’t afford to pay for expert guidance in their time of greatest need. Self-help law is always an option, but proceeding as your own lawyer is difficult and it is often dangerous.  Acting as your own lawyer is for the very brave, the very foolish or the very desperate.  Except for the fact that I do it myself all the time, I don’t recommend jumping into the shark pool alone. The possibilities are sink, swim or be eaten alive.

With that warning in mind, I know that the brave, foolish or desperate will go it alone anyway. I have to admit that proceeding without a lawyer is often a much safer and better option than is doing nothing.  Although our legal system is vast, confusing and complex, most personal legal problems are not all that difficult. With enough information, clearly explained, I firmly believe that anyone with average intelligence or above can fairly quickly understand his or her available legal options, and decide how to pursue a useful course of action.

Please remember the legal outcome is never guaranteed, there is always the possibility that you will make your situation worse and there are ways to get professional legal advice for free.

Introduction

Garnishment is a generic legal term for a debt collection method for confiscating a debtor’s money or property from a third party. Different states may use different words to name the same basic procedure. There are two general categories of garnishment: wage garnishment and non-wage garnishment.

Wage garnishment happens when a creditor forces a debtor’s employer to withhold a portion of one or more paychecks to satisfy a debt.

Non-wage garnishment happens when a creditor forces any third party to turn over any money or personal property in the third party’s possession that belongs to or is owed to the debtor, to satisfy a debt. Typically, a debtor’s bank accounts may be garnished, but non-wage garnishments are not limited to bank accounts.

There are two general legal mechanisms by which a creditor may force a garnishment: judicial and administrative.

Judicial garnishments arise from credit card debts, consumer loan debts, personal injury damage awards, breach of contract damages, divorce property settlement debts, debts or damages in landlord-tenant disputes or any other of the many ways a person can be in debt because of having been sued in a court of law.

Administrative garnishments can result from tax debts, student loan debts, child support debts, or from nearly any debt owed to the federal government.  Administrative garnishments generally do not involve the court system at all.

Each of these different type of garnishments involve different rules and procedures, so it is of critical importance that a debtor know the type of debt involved in the garnishment debt collection process.  Since each state has different garnishment collection laws, it is important not to be confused by using the wrong set of state rules.

Unfortunately, there is another type of garnishment, which I call the scam garnishment. This type of garnishment may appear when an unscrupulous creditor deceptively tries to use an administrative garnishment process for a consumer debt collection that ought to proceed as a judicial garnishment, for example. Tricksters may even attempt to collect a debt that does not exist or which has expired.

More often, I suspect, honest mistakes happen. The wrong amount is claimed, a payment is overlooked or the wrong interest rate is applied to a legitimate outstanding debt. In any event, a debtor who is subject to a garnishment proceeding will be well served by a careful examination of the debt that is claimed and by an understanding of the proper legal procedures which control the collection process.

Finally, in every state there are provisions for limits and exceptions to the type and amount of property or cash that creditors can seize in the garnishment debt collection process. A few of these limits are fairly automatic from a debtor’s point of view, but there are many others that a debtor must act upon in order to claim and preserve.  Knowing what the exemptions are and how to claim them is important. It is also time-critical. A debtor’s diligence and prompt action can make a big difference.

Limits on wage garnishment

15 USC § 1673 places limits on the amount that can be withheld from a debtor's paycheck by way of a wage garnishment. See: What's the maximum amount of wage garnishment? There are different percentage limits depending upon the type of debt being collected, but in every case the statutory limits are applied to disposable earnings and not gross earnings. 15 U.S. Code § 1672(b) provides the following definition:

The term “disposable earnings” means that part of the earnings of any individual remaining after the deduction from those earnings of any amounts required by law to be withheld.  

Examples of legally required deductions applicable to all wage earners are:

• federal, state and local income or occupational taxes, 
• the Medicare tax and 
• Social Security contributions. 

Each of these is "required by law to be withheld." and must be excluded from the calculation.

Other Common Legally Required Deductions:

• Court-ordered child support – where the employer is legally required to withhold it under a valid court or administrative order.
• Federal tax levies – including IRS wage garnishments, once properly served and prioritized.
• State tax levies – similar to federal levies if the employer is required by state law to honor the levy.
• Public employee retirement system contributions – mandatory deductions from public employees’ paychecks (e.g., CalPERS in California, FRS in Florida).
• State disability insurance (SDI) – is required in some states like California, New Jersey, and New York.
• Unemployment insurance contributions – in some states, these may be withheld from employees (though usually paid by employers).

Not Legally Required (Not Deducted Before Garnishment Calculation):

• Voluntary retirement contributions (e.g., 401(k), IRA).
• Health insurance premiums (unless required by law or a court order).
• Union dues (unless required by law or a collective bargaining agreement with statutory force).
• Wage assignments or voluntary deductions (e.g., charitable contributions, loan repayments to employer).
• Most wage garnishments themselves (unless specified otherwise—child support is a special case under federal and state law).

Special Case: Child Support and Alimony

Under Consumer Credit Protection Act (CCPA) rules, child support and alimony are considered exceptions where garnishment limits can be higher—up to 50–65% of disposable earnings—but the definition of disposable earnings remains the same: gross pay minus legally required deductions.