Alaska Wage Garnishment Laws

There’s no point to winning a lawsuit in Alaska against someone if he or she never pays you. That’s where garnishment comes in—it’s a mechanism by which a winning creditor can look to money, property, or debts owing to the debtor, but held by other people (third parties) for compensation. The idea is, if the debtor won’t pay, force those who have something of value belonging to the debtor to turn it over to the creditor.

Any property or debt of debtor in the possession of a third party can be garnished—for example, money in debtor’s bank account could be garnished, or payments to debtor from a pension plan or annuity. The “classic” garnishment however—the one that most people think of when they hear “garnishment”—is wage garnishment. In it, the debtor’s employer is forced to turn over part of debtor’s salary or wages to the creditor.

Garnishment is a legal process. The first step in garnishment is for the creditor to sue the debtor on a debt and win, thereby establishing creditor’s legal right to the money. The next step is the garnishment itself. This means that, with a few exceptions (like the IRS), creditors cannot garnish debtor’s wages without first suing him or her and winning, getting a judgment—a court order or determination—in the creditor’s favor.

Alaska Garnishment Exemptions and Non-Exemptions

Garnishment laws vary by state. States have the right to establish their own exemptions to garnishment, which means they can carve out types of income which cannot be garnished. Alaska, in keeping with its ethos as protector of individual rights, has more exemptions than most states, embodied in what’s known as the “Alaska Exemptions Act.” This Act sets out a great many categories of income which may not be garnished. These categories are layered on top of the main federal exemption, Social Security (which can only be garnished for child support, alimony, federal taxes, and certain other debts to the federal government). The types of income exempt from garnishment in Alaska include:

• Many state or local pensions, such as those public employees, judges, state employees, and teachers
• Many forms of public benefits or assistance, such as workers’ compensation, unemployment benefits, aid to families with dependent children, aid to the blind, etc.—even including up to 45% of a person’s permanent fund dividends
• Some insurance benefits, such as disability payments; life insurance proceeds if the beneficiary (who is also the debtor) is the insured’s spouse or dependent; medical benefits; insurance proceeds for personal injury or wrongful death—though note: while some insurance benefits are entirely exempt (e.g. disability), other ones are exempt only up to the same threshold or amount as wages or salary would be exempt (see below)
• Alimony, up to the wage or salary exemption amount; child support collections made by the child support services agency

Remember: other than specific exceptions, any income—including private employee pensions—can be garnished.

Alaska Maximum Threshold

Subject to the exempt amounts, Alaska allows 25% of disposable income to be garnished (which is the same as saying that 75% of disposable income is exempt from being garnished). To most people, “disposable income” is income left over after all expenses required for day-to-day life, including food and housing. It’s the money a person has left for investment, savings, or even entertainment. However, garnishment law defines it much more strictly: disposable income is income left after legally required deductions from a person’s paycheck. There are only a few of these, like FICA, and no deduction not mandated by law, including health insurance, 401(k) contributions, or union dues, is considered in determining disposable income. The result is that the vast majority of most people’s income will be disposable income.

Note though that the rule is not 25% of income for each garnishment—it’s a total of 25% total of disposable income that may garnished, which means that is someone has a lot of creditors, not all of them may actually be able to garnish the debtor’s income.

It’s important to note that Alaska provides additional protection for debtors. Regardless of the above, an individual debtor in Alaska is entitled to exempt at least $350 of his or her weekly net earnings under the Alaska Exemptions Act. “Net earnings” in this context is similar to “disposable income”—it’s income after deductions required by law are taken out. That means that on an annual basis, a debtor can exempt at least $18,200 of his or her net earnings from garnishment.

Alaska Statute of Limitations

Just as garnishment is a two-stage process—first get the judgment, then garnish—there are two different statutes of limitations involved. First, there is the statute of limitations for the underlying debt on which garnishment will be based. For the most common consumer debts, the limitations period will be four years (sale of goods) or six years (most contracts).

Assuming the lawsuit was brought on time and the creditor received a favorable judgment, the creditor will then have 10 years to enforce it. Anytime during the 10 years following the judgment, the creditor may look to garnish the debtor’s wages. This means that a patient creditor can wait until a then-down-on-his-or-her-luck debtor starts doing better and has income worth garnishing.

Writ of Garnishment in Alaska

The debt may be between creditor and debtor, but garnishment is between the creditor and the person holding money for debtor, such as debtor’s employer—the garnishee. In brief, the creditor, armed with its judgment, applies to the court to have the debtor’s property or debts owed debtor (which includes income payable to the debtor) taken to pay debtor’s debt to creditor. (Alaska draws less of a distinction between taking debtor’s property and garnishing his income than many other states.)

The court will reach out to anyone who’s been identified as owing debtor money, such as debtor’s employer(s); they will have court documents served on them, requiring them to account for the money to the court, then turn it over. If someone does not comply and turn over the debtor’s money, they become liable to the creditor for the amount, there is a strong incentive for people—such as the debtor’s employer(s)—to comply with the garnishment.

Getting Legal Help

 A debtor does not need to meekly submit to having income garnished. There are ways to challenge garnishment, such as:

• Attack the validity of the judgment on which the garnishment is based (though if the case was fully litigated previously, there may not be any practical way to attack the judgment).
• Show that the calculation of the debtor’s disposable income is too high, and therefore the amount of the garnishment has to be reduced.
• If there are other garnishments going on, show that the debtor is already at the limit and can’t pay anymore.
• Show that some or all of the debtor’s income comes from exempt sources that can’t be garnished.

This last point is especially important in Alaska, where there are more forms of non-wage, non-salary income that are exempt than in most states.