Have your credit card payments or medical bills accumulated, and the creditor has initiated debt collection measures? While it is easy to ignore some debts, especially unsecured debt, the lender could take you to court and obtain injunctions requiring your company to withhold part of your pay and transfer the funds to your creditor’s account.
The decision by the court to allow for direct fund deductions from your pay can cause severe financial consequences. Wage garnishment is stressful, and if you learn that your employer is initiating the process, you must understand the legal provisions of the process, limits, debts that qualify for the process, and how to halt the wage attachment to protect your finances.
Wage Garnishment Definition
Wage attachment or garnishment is a legal process by which creditors obtain court directives requiring the debtor’s company or employer to withhold a specific amount of money from the debtor’s paycheck for debt payment. As the debtor, your employer must deposit the garnished funds to your creditor or their debt collection service. The debts the funds are used to settle include vehicle loans, owed rent, medical bills, payday loans, credit card loans, and car loans.
You should know that some creditors do not need a court directive to garnish your wages. Creditors who can garnish your wages through an administrative proceeding include those to whom you owe money in student loans, unpaid taxes, alimony, and child support. When you default on your loan, these lenders can automatically garnish wages from your paycheck without requiring a court directive.
California Wage Garnishment Limits
How much should your employer deduct from your paycheck towards debt repayment? According to California Civil Code Procedure 706.050, the maximum amount an employer can deduct from your pay should not exceed 20% of your weekly disposable earnings or 40% of your weekly discretionary income, 48 times above California’s minimum hourly wage. Disposable or discretionary weekly income means the amount you take home after deductions provided by law.
You should know that as much as the creditor can collect the amount you owe them, the law limits the deductions to enable you to meet your basic needs. The state has also passed Assembly Bill (AB) 2837, which takes effect in 2025, requiring a creditor to obtain a court judgment allowing them to garnish your wages to verify your address and inform you beforehand of their planned debt collection activities.
Additionally, the new law under California Civil Procedure Code 706.022 limits the duration of wage attachment and the frequency with which a creditor can seek one. Usually, a wage attachment directive lasts for 120 months from the day the court issues the orders. When this duration lapses, the creditor should stop the garnishment even if they have not recovered all their funds. Priority debts like student loans, alimony, and unpaid taxes have no timeline. The creditor will continue with the deductions until the loan is fully paid. Besides, the new statutes require financial organizations to safeguard exempt funds in different accounts by not levying them.
Protection for Low-Income Individuals
If you are a low-wage earner, the law allows you to seek exemptions from the garnishment. The court will grant the exemption if you demonstrate that you are experiencing hardships in meeting your basic needs and that garnishing your wages will make life unbearable. With the help of a profound bankruptcy attorney, you can demonstrate that meeting the basic needs will be close to impossible, thus compelling the court to lower the percentage attached to your wages or drop the garnishment entirely.
Certain bank accounts are protected from wage attachment. For instance, a creditor cannot levy your two months of Social Security. If your federal benefits are deposited directly into your account or loaded into your prepaid card, they are exempt from wage attachment. However, when you receive money through a check and deposit it with the bank, the financial institution can attach the funds to repay your debt. The only way to protect the check is to go to court and prove that the funds are from a protected benefit.
Funds like disability payments, Social Security, and public assistance benefits are protected because they are necessary to meet your basic needs. Therefore, credit card firms, commercial lenders, and medical facilities cannot attach bank accounts that receive these benefits toward debt payment. Nonetheless, the government can garnish federal benefits and use the funds to pay debts like defaulted student loans and unpaid taxes. Therefore, these protected benefits are not entirely protected from wage garnishment.
Types of Debts Garnished Automatically
California statutes recognize that particular debts do not require the creditor to seek judgment from the court requiring the employer to withhold wages and use the withheld amount to repay creditors. Your wages will automatically be attached to pay the debt without court directives if you owe the following types of debts:
Defaulted Student Loans
When you default on the payment of your student loans, the federal government can pay your wages and attach the funds to repay the loan without seeking court orders. The government accomplishes this through a process known as administrative garnishment. Sometimes, the government will even garnish your protected benefits, like Social Security, and use the money to settle your student loan. However, the fraction of your wages the government garnishes is smaller than that of other creditors. The government can only take 15% of your disposable wages to repay defaulted student loans.
Owed or Unpaid Taxes
When you have accumulated unpaid taxes or tax levies, the government and Internal Revenue Service (IRS) can automatically garnish your wages devoid of a court order. Nevertheless, before the IRS attaches your wages, they consider several factors, like the number of people depending on you for financial support and whether you can satisfy your necessities without struggle. The IRS will only garnish a small fraction of your wages if you have several dependents. The same applies when you can barely meet your needs. Unpaid taxes can lead to wage garnishment not exceeding 25% of your take-home pay, so you should take it seriously and speak to an experienced bankruptcy attorney to find ways of lowering the rate or avoiding the garnishment altogether.
Child Support Deferment
Failing to pay child support as directed by the court can result in significant garnishment percentages. The court can allow your employer to withhold 50% to 60% of your wages depending on whether the other parent is supporting another child or dependent. When the court issues a garnishment directive for deferred child support, they will send a letter to the employer explaining the reasons for the garnishment. The letter is usually embarrassing as it discloses some of your family details that you would wish to remain private to the employer. The garnishment rate provided in the court letter is not final. You can challenge the judgment if the income provided is incorrect, you are currently unemployed, or you are having financial difficulties.
Credit Card Loan
Credit card debts are joint among Californians. Luckily, these companies are usually open to negotiations or the development of flexible payment plans that make it easy to repay the funds you owe.
Spousal Support
Otherwise called alimony, spousal support is the financial obligation the court imposes on one spouse over another to provide financial support after the dissolution of a marriage. The financial support ensures the other unemployed or low-income earning partner lives comfortably after the divorce. The person seeking alimony must apply with the court, explaining why they seek financial support. When the court grants your ex-spouse their request for alimony, they will send directives to your employer, instructing them to deduct a certain percentage of your disposable income automatically and deposit the funds in your ex-spouse’s account as spousal support.
Your Rights During Wage Attachment
You have many rights when it comes to wage garnishment. First, you can exempt all or some of your wages from attachment through an exemption claim to the relevant court or by contesting the garnishment. The procedure you follow to challenge the garnishment depends on the type of debt.
Similarly, you have a right not to be terminated from your job because of wage attachment. Many employers could be tempted to terminate workers who face wage garnishment because complying with the garnishment conditions can be challenging. Luckily, California statutes offer you protection under these circumstances. 15 U.S.C. 1674 prohibits your employer from terminating your employment because of a wage attachment order. However, federal laws will not protect you if you have multiple wage garnishment directives.
Also, you are entitled to be informed of the garnishment details. You must have all the information about the garnishment rates and the reasons informing the directive.
Objecting Wage Attachment or Garnishment
When you receive a wage attachment notice, you can object. The objection process depends on the debt type the creditor seeks to collect and the stipulations of the state laws.
The first step is to speak to a profound bankruptcy attorney about your case. The attorney will review the garnishment notice. Once they have the details of your case, they will prepare the paperwork and submit it to the court. If all or part of your income is exempt from wage garnishment, you mention it in your objection. Alternatively, your bankruptcy lawyer can respond by stating that you have settled the money you owe the judgment creditor or that your debt has been discharged through bankruptcy.
Instructions on how to proceed with the objection process are contained in the garnishment notice. If the paperwork needs to include these details, your attorney can contact the concerned court clerk. Typically, the notice comes with an objection form.
So, when you are notified of the impending wage garnishment, talk to your attorney to file exemptions. The advantage of an exemption is that you can file one even after the lapse of the timeline provided for filing. However, the disadvantage is that the exemption will only take effect from the time of filing. You will not receive a refund for the wages already garnished.
Also, file the objection on time because if you do it late, you could waive this right to challenge the garnishment, which could spell more financial trouble.
After you file the paperwork, the court will schedule a hearing to determine your case. Once the court hears your case and that of the creditor, they can choose to sustain the objection, meaning they could terminate the garnishment or reduce the rate. Alternatively, the judge could overrule the objection, allowing the wage attachment to continue.
Stopping Wage Garnishment
When a creditor attaches your wages to pay a debt, you want to know when the attachment will end. The garnishment will end when:
- The court sustains your objection and puts garnishment to a halt
- Clear all your debt
- You discharge debt under Chapter 7
- You file for Chapter 13 bankruptcy
Stopping Garnishment by Paying the Full Debt
Creditors opt for wage garnishment because they have exhausted their patience and have no other way of recovering their money. No creditor wants to receive payments in garnishment for up to 120 months. They would rather receive a small amount upfront or as a lump sum. Therefore, you can stop the garnishment after receiving notice by offering to settle all your debt for less than the figure you owe. The creditor will be willing to accept less to pay the entire debt than opt for garnishment.
Stopping Wage Attachment through Bankruptcy
Another way to stop wage attachment is to declare bankruptcy. When you declare insolvency, the law places you under an automatic stay, which stops creditors from engaging in debt collection activities, including wage garnishment. The type of bankruptcy you declare determines the amount of protection from garnishment you will enjoy.
When you declare Chapter 7 or liquidation bankruptcy, a court-appointed trustee will sell your assets and clear debts like personal loans, credit card loans, and medical expenses.
Under Chapter 13, you develop a debt repayment plan to repay your debts through monthly payments. This form of insolvency will not discharge all your debts, as unpaid taxes, child support, and alimony will not be discharged. However, you can develop a repayment plan for nondischargeable debts instead of having your employer garnish your wages to avoid wage attachment.
Find a Competent Bankruptcy Attorney Near Me
California wage attachment or garnishment is stressful and complicated, but understanding the laws and your rights can ease the process. After receiving a notice of the garnishment, the best approach is to speak to an experienced bankruptcy attorney to explain the garnishment and your option of seeking an exemption or stopping it. At the Los Angeles Bankruptcy Attorney, we know how to handle wage attachment and protect your financial stability appropriately. Call us at 424-285-5525 to discuss your case.
