Reasons Why Your Paycheck Can Be Garnished

I guess I should start this Hub off by saying that I'm not a financial expert by any stretch of the imagination. Heck, I didn't even stay in a Holiday Inn last night! But I have known more than a few people who had a run of bad luck in their lives. Some ended up finding out first hand the reasons they can garnish your paycheck. So I thought I'd share a few of the reasons I've heard about. This isn't a complete list and each state has slightly different laws concerning garnishments.

Just remember this. From what I understand, your paycheck can be garnished in every state for a variety of reasons. So if you think you'll just up and move to another state after getting your paycheck garnished, think again. They can, and will, come after you as long as you live in the U.S. They may also come after you in other countries like Canada and Mexico, but I have no idea about the procedure in those places!

There are some states like Texas where creditors are strongly governed over how much and "IF" they can even garner your wages for certain types of debts. That's why it's so important to talk to a legal professional about garnished wages. It's a good idea to do this BEFORE you check is garnered!

What Is A Garnishment?

As best as I can describe it, a garnishment is a court ordered withholding of money from your paycheck. This occurs after a person or company wins a judgment against you in court. From what I've seen, the courts will try and never leave you in a hardship, but they will take as much as they think they can without leaving you in the poor house. Of course, many times the person who is being garnished swears they're about to die after having their check garnished! The IRS can also garnish your wages.

When someone wins a lawsuit or judgment against you, the Court will order your employer to withhold a certain amount of your paycheck so as to repay the person who won. Your employer is legally bound to do this. At least in every State I'm aware of. They do this to keep you from spending all the money after getting paid. So now that you know what a garnishment is, let's look into a few of the reasons they can garnish your paycheck.

You Owe Back Taxes - Make no mistake about it. If you owe Uncle Sam, he's going to get his money one way or another. Now having said that, they'll give you every opportunity to repay the taxes before they start pulling them out of your paycheck. All you have to do is work with them and set up a payment plan. At least this is what several of the people I've known over the years did. It's the ones who kept ignoring the IRS that ended up having their paycheck garnished. I'd lot rather repay them according to my schedule than have the IRS tell me how much they're going to forcible take by making my employer withhold a garnishment!

Remember when I said the Courts would never impose a hardship on you when garnishing your wages? Well, the IRS can withhold up to 90 percent of your net pay! So this would be one exception to that rule. However, from what I've been told, they will generally just take out 80 to 85 percent. Now don't you feel better?

You Received A Court Judgment Against You - Let's say your best friend sued you for a million bucks and won. You say you'll never repay that debt no matter what! The Court says "oh yes you will!" The Court will then make your employer withhold a certain amount of money each time you get paid and deposit to your friend. The amount may be so small that you'd never be able to repay the million dollars, but as long as you work and draw a paycheck, you'll be repaying your "friend". Moral of this story? Better choose your friends wisely. See, your Momma was right!

You Owe Back Child Support or Alimony - Speaking of picking your friends wisely, it's far smarter to pick your Spouse more wisely than your friends! Out of the reasons they can garnish your wages, I've known more people who had their wages garnished over child support and Alimony. I've been told there are some states that will not force a person to pay Alimony, but I don't know which states those are or even if that's true. So better check that out for yourself. Might be something you'd want to put in that prenup agreement!

Defaulted Student Loans - Ah yes...we're lead right back to Uncle Sam again. Funny how they make rules that ensure they're going to get their money one way or another isn't it? This might be for all of you who have pipe dreams of going to college for 10 years to earn some silly degree and then take a job making $25,000 per year. I know that may seem amusing to some of you, but I know a lot of people who've spent several hundred thousands dollars on degrees and then work for peanuts. What's wrong with this picture?

Of course, I know a Doctor who has over $300,000 in student loan debt because he only wanted to attend the best private schools. You know what? He's not making a bit more than the Doctor who went to a public state run college and has a student loan of $40,000!