NCLC Advice on Wage Garnishment and Bank Account Seizure

The National Consumer Law Center has published a new article advising consumers on wage garnishment and bank account seizures.  This topic is especially important considering how third-party debt collectors often say or imply that they can take your money without the going through the judicial process.  As the article points out, there are only two exceptions to the judicial process:

1. Secured creditors, such as your auto or mortgage lender, can seize their collateral if you get behind on your payments to them.
2. The government can garnish your wages and seize tax refunds to repay student loans or other debt owed to the government.

Even if the collector has a judgement, a large amount of your paycheck is protected:

A portion of your wages is protected from seizure. Federal law protects most of your wages from garnishment, and, if your wages are very low, your paycheck is entirely protected. “Wages” that are protected include commissions, vacation pay, sick pay, disability benefit payments, and pension and retirement payments. The first $217.50 from weekly take-home pay, after taxes and Social Security are deducted, cannot be garnished at all. This amount will go up if the current federal minimum wage of $7.25 per hour goes up.

If your take-home pay is between $217.50 and $290 a week, then only the amount over $217.50 can be garnished. If your take-home pay is more than $290 a week, then 25% of your wages can be garnished. For example, if your weekly take-home pay is $250, then $32.50 a week ($250 minus $217.50) can be garnished. If your take-home pay is $600 a week, $150 a week (25% of your pay) can be garnished. A higher amount can be garnished if the debt is for child support or alimony. If your wages are garnished, your employer will be given instructions about how to make these calculations. You do not have to do anything to trigger the protected amounts, but you may want to double-check your employer’s calculations.