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MY PAYCHECK IS ABOUT TO BE GARNISHED
Have you just been notified by your HR Department of an income execution and that your wages will be garnished? Perhaps you didn’t even know that a lawsuit had been filed against you or that you even owed a debt. If you want guidance on what to do next, call Graham & Borgese today. Our experienced attorneys will explain the process to you and make a plan of attack to get you the very best results possible.
What Is a “Wage Garnishment” or “Income Execution”?
A wage garnishment, or income execution, is the process whereby your employer is directed to withhold money from every paycheck you earn until the debt in question is repaid in full (plus interest). Different garnishment rules apply for different types of debt – such as student loans, tax debts, credit card debts, etc.
New York State wage garnishment laws (known as “income execution” laws) generally provide that creditors with judgments can only take up to 10% of your gross wages, although certain exceptions to this rule exist.
When Can a Creditor Garnish Your Wages in New York, New Jersey or Pennsylvania?
For the most part, creditors must first obtain a judgment in Court before they can try to garnish your wages. In order to obtain a judgment, a lawsuit must be filed with the Court and then service ofa Summons & Complaint must be completed. Sometimes proper notice is not given to the person being sued (i.e. the defendant) and this may be grounds for having the judgment thrown out (or “vacated”). For more information on what to do if you believe you were never served, visit our “Getting Rid Of Judgments” page.
Although most creditors need to get a judgment before they can try garnishing your wages, there are some exceptions to the rule. For example, wages can be garnished without the need for a judgment for unpaid debts such as income taxes, child support and defaulted student loans.
Limitations on Wage Garnishments
Generally, in New York State, a creditor can garnish either 10% of your gross wages or 25% of your disposable income, whichever is less. However, if your disposable income is less than thirty (30) times the minimum wage, it cannot be garnished at all. In New Jersey and Pennsylvania, the laws are similarly written but slightly different.
“Disposable earnings” refers to the amount of money left in your paycheck after your employer has made all the deductions required by law (i.e. taxes, Social Security, unemployment insurance, etc.).
Deductions that are not required by law do not count to reduce your disposable income (i.e. money you direct to a special account for personal use or investment).
Wage Garnishment for Federal Student Loans
If you are in default on a federal student loan, the U.S. Department of Education (or any entity collecting on its behalf) can use an “administrative” wage garnishment to take up to 15% of your disposable income (but again, no more than 30 times the minimum wage).
A federal agency may not garnish your wages if you have not been working at your current job for at least 12 months and did not voluntarily leave your previous job.
Wage Garnishment for Unpaid Taxes
The IRS can also garnish your wages without first obtaining a judgment if you owe the federal government back-taxes. The amount the IRS can garnish depends on how many dependents you have and your deduction rate.
If you owe back-taxes to the state, the state can pursue garnishment of up to 10% of your gross wages to collect the debt.
How Much of My Pay Can Be Garnished In Total?
If you have more than one debt for which wage garnishment is being sought, the total amount that can be garnished is limited to 10% of your gross wages or 25% of your disposable wages, whichever is less.
For example, if the federal government is already garnishing 15% of your disposable income to repay your defaulted student loans when your employer receives a second wage garnishment order, your employer can only take another 10% of your disposable income to send to the second creditor. However, if 10% of your gross wages are already being garnished, then other judgment-creditors will generally be forced to wait their turn.
Can I Be Fired Because of a Wage Garnishment?
Federal law states that your employer cannot discharge you if you have one wage garnishment. In New York State, your employer cannot fire you, refuse to promote you, or take any negative action against you, solely because of an income execution.
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(*NO Child Support, Divorce, Taxes or Tenant/Landlord Cases. Sorry.)