A wage garnishment requires a court order that gives a creditor the right to automatically collect a designated portion of a debtor’s wages or salary, or other income. There is a federal law that sets limits on the amount that can be garnished weekly, and each state has also passed garnishment laws. The state laws vary and some do allow for exemption amounts for legal dependents to be included in the garnishment exemption calculation.
When a creditor goes to court and gets a judgment against a debtor, it is only the first step in the collection process. To actually collect the money by having payments withheld from income sources requires a second step. The creditor must get another court order that allows the creditor to garnish someone’s wages or other income like interest, retirement account earnings or other monies.
The federal laws on garnishments set the upper limits on the amount that can be garnished. The maximum amount must equal the lesser of:
Disposable income by federal law is defined as the net income after payroll taxes are deducted. There is no allowance for dependents in determining the amount of the disposable income subject to a garnishment. However, the broad federal definition of disposable income has led some states to allow for certain exemptions for dependents.
Garnishment laws vary from state to state. Some states follow the federal law exactly while others have passed laws that are more lenient. States are not allowed to pass garnishment laws that are stricter than the federal law. Since each state law is different, you should get legal advice applicable to your state.
An example of a state where the number of dependents determines garnishment exemptions is Vermont. In Vermont, if a debtor is able to prove that the disposable income is used to support the debtor and legal dependents, then all the disposable income may be exempt.
In Virginia, a debtor who supports dependents can exempt $500 of personal or real property for each dependent. There are also weekly exemption amounts for children of a parent if the parent’s income meets an income limit as defined by law.
If your wages or other income has been garnished or a debtor is likely to seek a garnishment court order, it is important to consult an attorney that specializes in debt settlements. The attorney will know the laws for your state and can advise you as to how to best proceed so that you maintain ownership of enough disposable income to pay your expenses and support your dependents.