Creditor garnishment is a legal process that lets a creditor collect a debt by ordering a third party who holds your money, usually your employer or your bank, to hand it over. For ordinary consumer debts like credit cards, medical bills, and personal loans, federal law caps the take at 25 percent of your disposable earnings each week, and several categories of income cannot be touched at all.
How the Process Works
Three parties are involved: the creditor you owe, you, and the garnishee, meaning the employer, bank, or other party holding your funds.
A private creditor almost always has to sue you and win first. The creditor files a lawsuit, proves the debt, and gets a court judgment. Only then can it apply for a writ of garnishment, the formal order that tells your employer or bank to turn money over. You must receive written notice, which gives you a chance to claim exemptions or challenge the amount before any money moves.
A few kinds of debt skip that lawsuit step entirely. The IRS, the Department of Education, and child support enforcement agencies have their own statutory authority to garnish without going to court first.
Wage Garnishment and Bank Levies
Garnishment shows up in two main forms.
Wage garnishment is an ongoing deduction from each paycheck. Your employer becomes the garnishee and must withhold a portion of your earnings every pay period until the debt, plus interest and court costs, is paid off. The withholding is calculated from your disposable earnings, meaning what is left after legally required deductions like federal and state taxes, Social Security, and Medicare.
A bank levy, sometimes called non-wage garnishment, targets money already sitting in a checking or savings account. It is typically a one-time event: the bank freezes the available balance the moment it receives the order. For IRS levies, the bank must hold the frozen funds for 21 days before turning them over, which gives you a short window to resolve the debt.1Internal Revenue Service. Information About Bank Levies Timelines for private creditor bank levies vary by state.
How Much of Your Paycheck a Creditor Can Take
The Consumer Credit Protection Act sets the ceiling for ordinary consumer debts. Disposable earnings under the law means compensation for personal services (wages, salary, commissions, bonuses, and periodic pension payments) after subtracting what your employer is required by law to withhold.2Office of the Law Revision Counsel. 15 U.S.C. 1672 – Definitions
The weekly cap is whichever of these two amounts is smaller:3Office of the Law Revision Counsel. 15 U.S.C. 1673 – Restriction on Garnishment
- 25 percent of your disposable earnings for the week, or
- The amount by which your disposable earnings exceed $217.50, which is 30 times the federal minimum wage of $7.25 per hour.
Worked out in practice:
- If you earn $217.50 or less in disposable pay for the week, nothing can be garnished.
- Between $217.50 and $290, only the amount above $217.50 is fair game. At $250, that is a maximum of $32.50.
- Above $290, the 25 percent cap controls. At $400 in disposable earnings, the ceiling is $100.
Some states cap garnishment more tightly than federal law does. When the two conflict, the one that leaves you with more money wins.
The 25 percent ceiling is a total. If one creditor is already garnishing the full amount, a second consumer creditor cannot stack on top of it.4U.S. Department of Labor. Fact Sheet #30: Wage Garnishment Protections of the Consumer Credit Protection Act (CCPA) Federal law does not set the priority order among competing orders; state law and the type of debt decide who gets paid first, and child support jumps to the front of the line.
Debts That Take More Than 25 Percent
The 25 percent cap covers ordinary consumer debt. Three categories play by different rules and can reach much deeper into your paycheck.
Child Support and Alimony
Court-ordered support carries its own limits:3Office of the Law Revision Counsel. 15 U.S.C. 1673 – Restriction on Garnishment
- 50 percent of disposable earnings if you are supporting a current spouse or another child.
- 60 percent if you are not.
- An extra 5 percent on either figure if you are more than 12 weeks behind, bringing the ceiling to 55 or 65 percent.5Administration for Children & Families. Is There a Limit to the Amount of Money That Can Be Taken From My Paycheck for Child Support?
Unpaid Federal Taxes
The IRS does not need a court judgment. If you fail to pay a tax debt within 10 days after notice and demand, the IRS can levy wages, bank accounts, and other property.6Office of the Law Revision Counsel. 26 U.S.C. 6331 – Levy and Distraint Before an IRS wage levy takes effect, the agency must send a Notice of Intent to Levy giving you 30 days to pay or work out an arrangement.7Taxpayer Advocate Service. Notice of Intent to Levy The IRS wage levy is not held to 25 percent. Instead, an exempt floor is calculated from your filing status and dependents, and everything above that floor can be taken.
Federal Student Loans
The Department of Education can garnish wages for defaulted federal loans through administrative wage garnishment, without a lawsuit. The cap is 15 percent of disposable pay from a single loan holder, and the combined total across all student loan holders cannot exceed 25 percent of disposable pay or the amount above 30 times the minimum wage, whichever is less.8eCFR. 34 CFR 682.410 – Fiscal, Administrative, and Enforcement Requirements You have the right to a hearing to dispute the amount or set up a repayment plan before garnishment begins.9eCFR. 34 CFR Part 34 – Administrative Wage Garnishment
Income Creditors Cannot Touch
Federal law puts several kinds of government benefits off-limits to private creditors.
Social Security retirement and disability payments are generally exempt from garnishment, levy, and seizure. The main exceptions are federal tax debts and court-ordered child support or alimony.10Office of the Law Revision Counsel. 42 U.S.C. 407 – Assignment of Benefits
Supplemental Security Income is fully exempt, even from child support, because it is a needs-based program.11Administration for Children and Families. Garnishment of Supplemental Security Income Benefits
VA disability compensation and pension benefits are protected from private creditor claims.12Consumer Financial Protection Bureau. Can a Debt Collector Take My Federal Benefits, Like Social Security or VA Payments? Payments from the Federal Employees Retirement System are also shielded except where federal law specifically authorizes garnishment.13eCFR. 5 CFR 841.110 – Garnishment of FERS Payments
Automatic Protection at the Bank
If those benefits are direct-deposited, your bank has to protect them without waiting for you to ask. Within two business days of receiving a garnishment order, the bank must review your account and identify federal benefit deposits made during the previous two months.14eCFR. 31 CFR Part 212 – Garnishment of Accounts Containing Federal Benefit Payments
The smaller of two figures is left fully accessible to you: the total of those two months of benefit deposits, or your current balance. The bank has to do this whether or not the account has other funds in it, a co-owner, or benefits from more than one program.
This automatic protection only kicks in for direct deposits. If you cash paper checks and deposit the money yourself, the bank is not required to spot exempt funds on its own. You would have to go to court and prove the money is exempt.12Consumer Financial Protection Bureau. Can a Debt Collector Take My Federal Benefits, Like Social Security or VA Payments?
If You’re an Independent Contractor
The 25 percent cap applies to “earnings,” which the statute defines as compensation for personal services.2Office of the Law Revision Counsel. 15 U.S.C. 1672 – Definitions Contractor income can qualify, but lump-sum payments that are not tied to personal services do not.
There is a bigger practical problem. Without an employer to serve, a creditor may skip wage garnishment and go straight for a bank levy, which freezes account funds without the 25 percent ceiling. If you are self-employed, your account balance is exposed in a way that an employee’s paycheck is not.
Can You Be Fired Over a Garnishment?
Federal law bars your employer from firing you because your wages are being garnished for a single debt.15Office of the Law Revision Counsel. 15 U.S.C. 1674 – Restriction on Discharge From Employment by Reason of Garnishment An employer who violates the rule can face a fine of up to $1,000, up to a year in prison, or both.
The protection only covers one debt. Once garnishment is running for two or more separate debts, the federal firing ban no longer applies. Some states go further and cover multiple garnishments or add penalties for retaliation.
What to Do If You Get a Garnishment Notice
The window to act is short, and doing nothing is the worst choice. If you miss the deadline to object or claim exemptions, the court will let the creditor proceed with the full amount requested.
Options usually include:
- Claim exemptions. File paperwork with the court showing that the targeted money is protected, such as Social Security or VA benefits sitting in your bank account.
- Challenge the amount. If the creditor is asking for more than you owe, or you have already paid some of it, file an objection.
- Contest the underlying judgment. If you were never properly served with the original lawsuit, you may be able to ask the court to vacate the default judgment.
- Negotiate directly. Many creditors will accept a voluntary payment plan that takes less each month than a garnishment would, and reaching an agreement can stop the garnishment.
For federal debt collection specifically, you generally have 20 days after receiving the garnishee’s answer to file a written objection and request a hearing.16Office of the Law Revision Counsel. 28 U.S.C. 3205 – Garnishment State-court deadlines vary, so read the notice carefully the day it arrives.