Wage garnishment is one of several ways creditors can look collect from debtors who do not voluntarily pay. It’s a mechanism by which a creditor has the right to have part of the debtor’s wages or salary sent to the creditor, to satisfy a court judgment or tax obligation. It’s important to recognize that garnishment can apply to any income, not just wages or salary—for example, pension benefits, payments from structured settlements, annuities, etc. can all be garnished. Wage garnishment, though, is possibly the most common type.
Garnishment, whether wage or otherwise, can be sued to satisfy any debt for which the creditor has a judgment ordering the debtor to pay money. Consumer debts, alimony and child support obligations, and tax debts are all common subjects of garnishment, but a creditor can use garnishment to satisfy any legally recognized debt, including those arising from any type of lawsuit or litigation.
Nevada Garnishment Exemptions and Non-Exemptions
It’s always the case that Social Security is most exempt from being garnished. Federal law allows it to be garnished only to pay obligations for child support, alimony, federal taxes, and a few other debts owed the federal government.
In addition, Nevada protects several other types of non-wage, non-salary income from garnishment.
- Pensions and retirement benefits: Nevada protects an unlimited amount of Nevada public employee pension benefits; it protects other retirement benefits up a defined (though fairly generous) limit—around $500,000 of present value.
- The core kinds of public benefits or assistance are protected, such as: workers’ compensation; unemployment benefits; aid to families with dependent children; aid to the aged, blind, and disabled; and vocational rehabilitation benefits.
- Insurance and annuities: several income streams from insurance or annuities are protected, such as fraternal society benefits; the proceeds of most life insurance policies; annuity benefits, up to $350 per month; group health or life benefits; and health insurance proceeds.
Nevada Maximum Threshold
Nevada is slightly more protective of lower-income debtors that federal law. Under Nevada law, the lesser of the following may be garnished:
- A total of 25% of disposable income (the same as federal law)
- The amount by which a debtor’s weekly income exceeds 50 times the minimum wage (federal law only protects up to 30 times)
The second criteria above is straightforward: in order to allow a debtor enough to live on, he or she gets to keep the equivalent each week of working at least 50 hours at minimum wage. (Of course, if you’re earning minimum wage, you’re eligible for overtime—time-and-a-half—for hours over 40. So this is really the equivalent of working 46 2/3 hours a week at minimum wage: 40 hours straight time, plus 6 2/3 hours overtime.)
What’s “disposable income,” in this context? The term does not mean what it usually means. In common usage, “disposable income” is what’s left all necessary expenses, including food, transportation, utilities, medical expenses, and housing. That makes it more-or-less synonymous with money available for investment, savings, or recreation/entertainment.
However, for calculating potential garnishment, disposable income will be 90%--or more!—of most people’s income: it’s what’s left after taking out only legally required payroll deductions, like FICA.
The legal system is always solicitous of child support obligations, and the government always wants to make sure it gets its: child support and tax debts can both lead to more than 25% of disposable income being garnished.
Nevada Statute of Limitations
For the most common consumer debts, the limitation periods (the time to bring a lawsuit) in Nevada are the same:
- Open accounts (credit cards), oral (or verbal) contracts: 4 years
- Written contracts, promissory notes: 6 years
This is important because the creditor needs a judgment before it can garnish. If it’s too much time has passed to sue, it is also too late for the creditor to seek garnishment.
Assuming the creditor has sued and obtained its judgment, under Nevada law, it has another 6 years to seek garnishment or otherwise enforce the action.
Writ of Garnishment in Nevada
Once a creditor has a judgment, it doesn’t take much to get garnishment. The creditor goes back to court, but since the debtor’s basic obligation to pay has already been determined, the process is fairly simple:
1) Apply to the court in writing for garnishment, based on the judgment
2) State that the debtor hasn’t paid and that garnishment is necessary
3) Identify one or more garnishees which have money of debtor’s
The garnishee(s) will be required to verify whether they have debtor’s money; if they don’t, they have the opportunity to show that they don’t, though they can’t challenge the creditor’s basic right to have the debtor’s funds garnished. If there are garnishees with debtor’s money, and if debtor cannot make and win some challenge to the garnishment, the garnishee(s) will be directed to turn money over for the creditor’s benefit. More on Stopping Wage Garnishment in Nevada.
Getting Legal Help
It may often be too late to dispute the underlying debt—that should have been done during the litigation or lawsuit that resulted in the creditor getting its judgment—but that doesn’t mean that a debtor can’t dispute or oppose the garnishment. With the help of an attorney, a debtor may be able to challenge either the judgment or the garnishment if:
- There is mistake in it—such as the wrong debtor or wrong amount named
- The statute of limitations was exceed (i.e. the debt is too old, or the enforcement effort is coming too late)
- Something was badly flawed in the process by which the judgment was granted (so it was not fairly litigated before) or garnishment is being sought—such as not properly serving (sending papers and notice to) the debtor
It may also be possible, if the debtor is receiving income from non-wage, non-salary sources, to show that the debtor’s income is partially or wholly exempt, and therefore cannot be garnished, even for a valid judgment.
For more information:
Nevada Revised Statutes[http://www.leg.state.nv.us/nrs/]
FAQ sheet about Federal garnishment rules[http://www.dol.gov/whd/regs/compliance/whdfs30.pdf]
Social security and garnishment[http://www.ssa.gov/deposit/DDFAQ898.htm]