You work hard for your money and there’s no shortage of deductions that get taken out of your paycheck. Elected contributions such as retirement, health insurance, and union dues take a chunk, as do mandatory contributions for federal income tax, state income tax, local tax, unemployment insurance, and Social Security. Employers are also required to withhold wages from employees involuntarily to satisfy debts imposed by law. Those amounts are submitted to the proper parties for disbursement, and employers can incur serious penalties for noncompliance.
Creditors must first get a judgment that they then file with the court to start the garnishment process. This does not apply to wages kept to satisfy tax levies, child support arrears, or defaulted student loans. Created in most states a century ago, the garnishment process has its roots in trying to prevent debtor deception. Creditors sought a way to stop the practice of debtors’ claiming poverty while giving away assets to a trusted party for return in the future. Federal and state laws have since been enacted to safeguard the rights of both garnishors and garnishees.
The main measurement of wages for garnishment purposes involves “disposable earnings,” which is the amount of income that an employee has left over after the mandatory contributions are deducted. Those voluntary deductions not required by law are garnishable. Under the Consumer Credit Protection Act, the amount that is withheld each week cannot be more than 25% of the worker’s disposable earnings or the amount by which disposable earnings are greater than 30 times the federal minimum wage, whichever is less. At today’s federal minimum wage of $7.25 an hour, that means an employee who earns $290 or more in weekly disposable income can have 25% taken, while an employee who earns $217.50 or less cannot be subjected to garnishment. An employee who earns between those two amounts can have the amount above $217.50 taken.
These limits only apply to consumer debt, such as for personal loans, credit cards, and medical bills. Federal law allows 15% of weekly disposable income to be garnished for repayment of federal student loans, around 15% for tax debt, and as much as 60% unless the worker is supporting another child or a spouse. While some states have enacted wage attachment laws that provide additional protections or exemptions, Kentucky’s laws mirror those of the federal government.
If a worker is subject to more than one garnishment, the total garnishable amount is limited to 25%. For example, if your income is already being garnished by 15% to repay back taxes and you receive another garnishment order, the second creditor can be sent only 10% of your income. Although it might be tempting for some employers to terminate employees rather than jump through the hoops that come with garnishment, one wage garnishment order is not a legal basis for dismissal. However, neither federal law nor Kentucky law provide protection to employees with more than one.
Though wage garnishment can cause feelings of isolation or embarrassment, it’s actually quite common. In a 2013 study by the ADP Research Institute examining payroll data from 13 million workers aged 16 years and older, it was determined that 7.2% had wages garnished that year. The number rose to 10.5% for employees aged 35 to 44 years old. Garnishment rates were highest for mid-range wage earners (those earning between $25,000 and $40,000), among the manufacturing industry (where almost 50% of the companies had garnishments), and in the Midwest (including Kentucky).
Having a portion of income withheld to pay off a debt typically makes it much harder to keep up on other bills and can drive many people to consider bankruptcy. At its core, wage garnishment is a form of collection – which means the automatic stay that comes along with filing for bankruptcy protection applies (except to domestic support obligations). Chapter 7 bankruptcy and Chapter 13 bankruptcy can stop garnishment immediately. If the debt that was the subject of the garnishment order is included in the debt discharged by bankruptcy, the garnishment cannot be resumed.
The Fayette County garnishment attorneys at Bunch & Brock are familiar with every aspect of debtor and creditor issues. We are a debt relief firm committed to providing each of our clients with personal attention and real solutions to financial troubles. Based in Lexington, our wage attachment lawyers can help you protect your rights and be your first line of defense. Each person’s situation has a unique set of facts and the best course of action varies, depending on a number of factors. As a bankruptcy law firm with more than 35 years of experience in the state of Kentucky, we have effectively represented many people who were in the same position as you are now. We are dedicated to providing each of our clients with a high level of personal service and effective counsel. Contact us today by calling 859-254-5522 or filling out this online form.
Attorney Matthew Bunch
Matt handles complicated bankruptcies and debt restructuring in Chapters 11 and 13 for both individuals and companies. He has also negotiated with multiple creditors on behalf of his clients to avoid bankruptcy. Matt is the firm’s lead litigator and handles contract disputes, certain personal injury claims and general litigation. [ attorney bio ]
