How Can I Protect My Wages From Wage Garnishment?

By Rachael Hayhurst

Wage garnishment does not apply to particular kinds of income. Even if a court has issued an order enabling an employer to garnish your wages, there are still exempt incomes that cannot be withheld to pay the creditor. Knowing what are the types of income that falls under the exception is important in protecting your wages from creditors.

Those that are exempted from the coverage of wage garnishment include wages, salary, social security, welfare, or unemployment compensation. Certain types of exemptions will only be applicable to heads of households. But most of these will apply to any person in general. It is important to note, however, that there are states, which do not consider income of independent contractors or sole owners of corporations as exempt wages.

All those that are considered exempt income cannot be forcibly taken by the creditor as payment of debt. Specifically, the exemption applies to certain types of income according to federal law such as Public Assistance (PA), Supplemental Security Income (SSI), Social Security, Social Security Disability (SSD), Veterans benefits (VA), child support, spousal maintenance, workers compensation, unemployment insurance, railroad retirement benefits, and black lung benefits.

There are also limitations to the amount of earnings that can be garnished in a workweek or pay period. The Consumer Credit Protection Act allows only an amount equal to the lesser of 25 percent of disposable earnings or the amount by which disposable earnings are greater than 30 times the federal minimum hourly wage that is set by the Fair Labor Standards Act. Hence, this protection will apply regardless of the number of garnishment orders the employee receives.

It must be noted, however, that all states do not exempt wage garnishment for child support, alimony, taxes and federal student loans. There are varying laws on garnishment for each state but the general guideline is if the wages to be garnished according to a state law is more than the wages allowed by federal law, the federal law must prevail.

One of the best ways to ensure protection against wage garnishment is to create a separate wage account in a bank. This is intended to help in separating protected wages from money acquired from other sources. But in some instances, a separate wage account is not required. For instance, Florida laws protect up to 100% of the head of household's wages from being garnished despite its getting mixed with other funds. This applies if you are able to show which deposited funds are the your wages.

When taking this option of creating a wage account, it must be kept in mind that debt collectors can also seek to freeze accounts. But if your account contains only the exempt funds, then the account can be released from any garnishment. Some states may vary in terms of the exemption period. In Florida, the wages cannot be garnished within six months as long as these are clearly segregated and identified as wages. In New York, only ten percent of the gross income can be garnished or the maximum amount allowed by federal law, whichever is less. If the garnished wages are applied to alimony, support or maintenance, the total combined amount should not exceed 25% of disposable earnings.

Some states like California applies the same guidelines provided by federal law. The state of Massachusetts may permit garnished wages of up to $125 per week. Pennsylvania, on the other hand, allows only garnishment for taxes and child support.

It is best to get more information of your state's rules on wage accounts and wage garnishment by creditors. Be informed of your rights so you can protect yourself from having bank accounts frozen and wage garnished by creditors. After all, the acts of creditors may violate existing rules on exemption for garnishment in your state.