Garnishment

Garnishment summary:

• Garnishment means a judge is ordering your employer to hold part of your paycheck and send it to the court instead of to you. The court then sends the money to your creditor. Garnishment can also happen to the money in your bank account.

• Generally, creditors need to obtain a judgment from the court to garnish your wages or benefits.

• You have rights that can protect some of your wages and benefits from garnishment.

Garnishment Definition and Meaning

Garnishment refers to a legal process where a creditor or government agency takes a portion of your wages or money from your bank account to pay off money you owe. Garnishment usually happens as the result of a court order after you lose a debt lawsuit.

There are two types of garnishment: 

• Wage garnishment. When your employer is ordered to withhold a portion of your paycheck and send it directly to the creditor or other debt-holder.

• Non-wage garnishment. When your bank is ordered to levy or freeze some or all of the money in your bank account and give it to the creditor or debt-holder.

How Garnishment Works

The first step to garnishment is usually a lawsuit. 

The creditor will sue you for nonpayment of a debt. If they win, they can ask for a garnishment. If the judge allows it, they’ll issue a court order telling your employer or bank to send a percentage of your income to the court. You may need to pay associated fees, like interest.

You don't need to be present in court for the action to proceed, and ignoring it won't make it go away. It's always best to address lawsuits from creditors or debt collectors right away.

Once the judgment is issued, you'll receive a notice by mail. You have a short window to challenge the judgment if you believe it’s wrong—as short as five days in some states.

If you accept the judgment (or lose the challenge), you can expect less take-home pay or money to be taken from your bank accounts when the garnishment begins.

Who Can Garnish Your Paycheck or Benefits?

Any creditor or debt collector who has won a judgment against you may garnish your wages or bank account according to the terms of the judgment. Some federal and state agencies can also garnish your wages or benefits without a court order.

Almost any unpaid debt has the potential to result in a garnishment. This can include:

• Credit card debt

• Personal loan debt

• Auto loan debt

• Medical bills

• Child support debt

• Alimony debt

• Student loan debt

• Tax debt

Are Government Benefits Protected From Garnishment?

Both federal and state rules protect some of your benefits from being garnished by creditors. Certain federal benefits may be safe from garnishment if you receive the money by direct deposit to your bank account or a prepaid card. Eligible benefits can include:

• Social Security benefits

• Supplemental Security Income (SSI) benefits

• Federal student aid

• Federal Emergency Management Agency (FEMA) benefits

• Veteran’s benefits

• Civil service and federal retirement and disability benefits

• Military annuities and survivor benefits

• Servicemember pay

• Railroad retirement benefits