Wage garnishment in Massachusetts is one way that creditors can collect from debtors who do not or will not pay them. Wage garnishment is when a creditor gets a court order directing that part of the debtor’s wages or salary be sent to the creditor for the outstanding debt. While wage garnishment may be the best known type of garnishment, it’s not the only kind: garnishment can apply to any income, not “just” that from working. For example, pension benefits, rental income, payments from insurance proceeds or a structured settlement, alimony, and public assistance are all potentially subject to garnishment, to the extent they are not made exempt or protected (see below).
A myth about garnishment is that a creditor can garnish wages on its own. Because garnishment is a judicial remedy, it takes a court order to garnish wages. Moreover, to get that court order, a creditor first needs a court judgment in its favor. What all this means is that a creditor has to go to court twice on any debt or obligation—first to sue the debtor and obtain a judgment establishing its legal right to payment, then to get an order or writ of garnishment—before it can garnish wages.
(Note: tax authorities like the IRS have a more streamlined process.)
Another common misunderstanding about garnishment is that it can only be used for what most people would think of as “debts,” such as resulting from the sale of goods, credit cards, or promissory notes. In fact, garnishment is available for any obligation to pay money, including obligations resulting from breach of contract, taxes, domestic support obligations, auto accidents, property damage, or professional misconduct.
Massachusetts Garnishment Exemptions and Non-Exemptions
However, as far reaching as garnishment is many ways (any source of income or money in the hands of third parties may be targeted, to pay any debt), there are significant limitations on it. To begin with, many sources or types of funds are exempt from garnishment, either entirely or at least up to a certain amount or dollar value. Below are some of the main exemptions available in Massachusetts:
- Social Security: under federal law, Social Security can only be garnished for child support, alimony, federal taxes (e.g. income tax), and small number of other debts owed the federal government.
- Pensions and retirement benefits: Massachusetts has broad protection for pensions and other retirement benefits, with one glaring exception (see below). Like most states, Massachusetts exempts public employee pensions. The state also exempts other pension and retirement benefits from garnishment, too. However, it does not appear to exempt distributions from retirement savings accounts, such as IRAs or 401(k)s.
- Many kinds of public benefits or assistance are protected, such as: workers’ compensation; unemployment benefits; aid to families with dependent children; veteran’s benefits; assistance to the aged or disabled; general public assistance.
- Massachusetts also has fairly broad (and somewhat odd, in some respects) protection for income from annuities or insurance policies. The proceeds of—
- o group life insurance and group annuity polices;
- o disability benefits, up to $400 per week;
- o fraternal society benefits;
- o life insurance polices and life insurance annuity contracts whose terms prohibit the proceeds being used to pay creditors;
- o and (in a throwback to a time before gender equality) life insurance policies where the beneficiary is a married woman—ANY married woman (i.e. the insured does not have to be her spouse)
—are all protected from garnishment.
However, not all the exemptions or protections referred to above are absolute. Several of them provide protections from most creditors (including merchants, credit card issuers, and banks) but not from garnishment for child support. For example, unemployment compensation can be garnished for child support.
One of the important things to note is that wages and salary are not exempt—though as noted, many other kinds of income or support are. If a debtor has non-wage, non-salary sources of income, he or she should consult with an attorney to determine to what extent they may be exempt.
Massachusetts Maximum Threshold
As balance for protecting a fairly broad array of non-wage, non-salary income, Massachusetts makes almost all of a person’s other income (including wages and salaries) potentially open to garnishment. Only the first $125 per week is exempt from garnishment, which means that essentially everything a debtor earns past around $6,000 a year could be garnished under Massachusetts law.
HOWEVER—and it’s a big “however”—federal law sets a ceiling on how much income may be garnished. States may—as several have chosen—be more protective or generous than federal law, but they can’t be less so. Under federal law, the lesser of—
- 25% total (no matter how many debts) of disposable income
- The amount by which a debtor’s weekly income exceeds 30 times the minimum wage
—may be garnished.
A key issue in determining exposure to garnishment is what is “disposable income”? To the extent most people think about “disposable income,” they probably consider it income remaining after all necessary expenses, such as shelter, health care or insurance, food, utilities, and transportation. It’s usually viewed as essentially the same as money available for savings, entertainment, and/or investment.
However, the law defines it much more strictly for garnishment purposes: income remaining after legally required payroll deductions (principally FICA) are taken out. As a result, most of a person’s income will be considered “disposable income.”
Adding to the potential pain for debtors is that the 25% threshold only applies to most debts. Certain debts, such as for unpaid taxes or child support, will allow more than 25% of income to garnished. (Tip: if a debtor can pay some debts but not all, pay taxes and child support; that way, he or she will avoid beinig in a situation where potentially 50% of income could be garnished.)
Fortunately for Massachusetts residents, even though your own state doesn’t seem to care much about leaving you enough to live on, the federal government has got your back.
Massachusetts Statute of Limitations
Massachusetts creditors have a LONG time to seek garnishment or otherwise enforce judgment in their favor: 20 years, or two decades! That gives a creditor the luxury of waiting essentially a generation, to see whether a down-on-his-or-her-luck debtor starts earning more money before garnishing income.
Of course, first the creditor needs a court judgment in its favor. That means the creditor must have brought a legal action against the debtor within the appropriate amount of time, called a statute of limitation, for the underlying debt or cause of action. The statute of limitation will vary with cause of action, but for some of the most common consumer debts—those based on contracts or credit cards—the statute of limitations (the time to sue) is 6 years.
Writ of Garnishment in Massachusetts
Remember, garnishment is the second step. First, the creditor must have sued the debtor and won in court. That means that before garnishment is even an option, the debtor has had an opportunity to dispute the debt. Since garnishment comes into play after there’s already been a legal determination that the debtor owes the creditor money, the debtor’s involvement in garnishment is often minimal.
Obtaining garnishment requires the creditor, armed with the judgment in its favor, to apply in writing to the court. The process is fairly straightforward; the creditor does not need to re-prove or re-litigate the debt, since the judgment establishes the creditor’s right to the money. Instead, the creditor merely needs to state that money is due it; garnishment is required, since the debtor has not paid; and some third party, such as the debtor’s employer (called the “garnishee”) has money available which is owed to the debtor (debtor’s salary or wages) and which can be used to satisfy the debt.
Papers will be served (or sent to) the garnishee, requiring it to confirm whether or not it has money owed the debtor. The garnishee can challenge the facts on which the creditor’s application for garnishment are based—for example, it can show that it pays the debtor less than claimed, or that there is no one by the debtor’s name employed with it. However, a garnishee cannot challenge or refuse the creditor’s basic right to garnishment. If in fact the garnishee has money of debtor’s that could be applied to satisfy a valid judgment and debt, garnishment will be ordered. More on Stopping Wage Garnishment in Massachusetts.
Getting Legal Help
There are ways to challenge a garnishment with a lawyer’s help. For example, it may be possible to attack the validity of the underlying judgment on which garnishment is based. This can’t be done by rearguing points or matters settled during the previous litigation, but if the judgment was granted improperly, such as by “default” when in reality the debtor had never been given proper notice of the legal action, there may be grounds to set it aside. Similarly, if something is procedurally wrong with the garnishment itself (or if the judgment is now too old to enforce, though that’s unlikely given how long Massachusetts’ statute of limitations for enforcing judgments is), it can be challenged on process or procedural grounds.
Another common tactic is to try to reduce the size of the garnishment, by showing that the debtor’s disposable income is less than the creditor or the court believes. One of the best ways to do this is to show that some or all of the debtor’s income comes from exempt sources .Particularly for retirees, given the protection afforded pensions, this can be an important way to protect income.
If a debtor is facing multiple garnishments, it is important to show their cumulative effect—once the total salary or wages being garnished reaches 25%, most new or additional garnishments cannot be applied.