The term “wage garnishment” is misleading. It sounds nice, doesn’t it? After all, a garnish is a pretty little flourish added to your food — could it be a pretty little flourish added to your wages? Unfortunately, quite the contrary: wage garnishment is a financial penalty one would ideally avoid. If you or someone you know is struggling financially, the experienced and compassionate attorneys at Young, Klein & Associates can help.
What is Wage Garnishment?
Wage garnishment is a tool sometimes levied by debtors as a last resort to collect unmade payments. Essentially, a certain amount of your paycheck will be withheld by your employer and automatically sent to your debtor instead. Of course, it’s a little more complicated than that.
Wage garnishment doesn’t happen overnight, but over multiple steps. First, debt is accrued — for example, student loan debt, credit card debt, or missed rent payments. When the creditor is unable to collect on the debt, that debt is sold to a debt collection company. If the debt collection company also fails to collect payments, they can file a lawsuit aiming for a garnishment judgment. At this point, the debtor has two options:
- They can declare bankruptcy.
- They can attempt to work out a payment plan with the collection company.
If these options aren’t utilized, the judge may rule in favor of a garnishment, at which point the debtor is firmly on the financial hook.
Additionally, there are certain types of debts which can be garnished without a court judgment passing beforehand. Unpaid income taxes, student loans, and child support payments can all prompt garnishment action with no court involvement.
Garnishment Restrictions in Pennsylvania
The good news is that there are federal regulations in place to protect consumers against unreasonable financial losses. On top of that, there are tough state-level restrictions in Pennsylvania, where garnishment is permitted in the case of:
- owed alimony or child support payments
- owed rent on a residential lease
- fines and fees owed as restitution for a crime
- owed student loans
- owed income or state taxes
At the federal level under Title III of the Consumer Credit Protection Act, the maximum amount of wages that can be withheld for garnishment purposes is 25%. Pennsylvania imposes even stricter limits: garnishment due to state taxes or missed residential rent payments is capped at 10%. Furthermore in Pennsylvania, if your income is less than thirty times the amount of the federally-set minimum wage (currently $7.25 per hour), your wages cannot be garnished due to student loans, federal taxes, or alimony. Garnishment is not permitted, period, for individuals living below the federal poverty level. If you are facing more than one garnishment (e.g. one for a student loan and one for credit card debt), together, the amount they constitute cannot exceed 25% per federal law.
In terms of job security, consumers have a moderate degree of protection. While employers are legally prohibited from firing an employee due to one garnishment, they are not prohibited from firing an employee with more than one garnishment.
If you are being threatened with wage garnishment, contact our attorneys immediately to explore your financial options.
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