Wage Garnishment: How Creditors Take Money From Your Paycheck
by Richard Fonfrias,
J.D. Chicago’s Financial Rescue &
Fonfrias Law Group, LLC
Garnishing Your Wages
If you fail to pay the judgment, creditors can profit from another legal tool, the wage deduction proceeding, also called a wage garnishment. This is where the creditor tries to get your employer to deduct money from your paycheck and send it directly to the creditor.
The Process Called Wage Deduction
When a creditor has a judgment against you, he can file a “Wage Deduction Affidavit” with the court clerk. In this affidavit, the creditor states that he believes your employer owes you wages. In addition, the creditor must certify that he sent you a “Wage Deduction Notice” before filing the affidavit, with your last known address appearing in the affidavit.
In addition, the creditor must also file with the court clerk and send to your employer written questions called interrogatories. These questions help the creditor learn how much money your employer owes you in a specific time period, and calculate the amount of non-exempt wages he can deduct. Your employer must answer these questions, file them with the court, and send a copy of the answers to your creditor and you.
The Wage Deduction Notice
The law requires that the Wage Deduction Notice sent to you must be in a specific format. The notice must tell you that a creditor has started a court proceeding to have your employer withhold your wages — and the date and time your case will be heard in court. It must also explain the formula used to determine the amount of wages that can be deducted — and the amount of wages that are protected. In addition, the notice explains how you can ask for a hearing to dispute the wage deduction.
How Much Money Can Your Employer Withhold?
Your employer can withhold only part of your wages, after deductions for taxes and Social Security. He must pay you 45 times the state or federal minimum wage, whichever is greater. At $8.00 per hour, the state minimum wage is higher than the federal minimum wage. As a result, you can take home at least $360 per week in wages. No wages can be deducted if you take home less than $360 per week. And if you take home more than $360 per week, your employer can deduct whichever of the following amounts is less:
(1) 15% of your weekly gross wages, or
(2) the amount of your weekly take-home pay above $360.00.
In addition, your employer may withhold a small fee for the company’s time in deducting money from your wages.
Is Your Employer Deducting the Right Amount From Your Wages?
First, figure out how much money your employer takes from your weekly earnings. Specifically, check to see if your employer is taking more money than the law allows. If so, bring this to your employer’s attention and ask that he deduct only the correct amount.
When your employer responds to the interrogatories (legal questions answered under oath), review his answers and see how much non-exempt wages he claims to have deducted. If he persists in deducting too much from your wages, then ask for a hearing so the court can determine the correct amount of your exempt and non-exempt wages. you’ll find instructions about how to request a hearing on your Wage Deduction Notice.
By law, your employer cannot fire or suspend you because he is deducting money from your wages to pay a debt. However, this applies only to a single debt. If you have two or more creditors carrying out wage deduction actions through your employer, then the law no longer protects you from termination or suspension.
Garnishment of Non-Wages
When a creditor gets a court judgment against you, in addition to your wages, he can seize non-exempt money that belongs to you or is owed to you. In most cases, a non-wages garnishment seizes money from your bank account. However, the money can also come from an insurance company or anyone else who owes you money.
How Garnishment Works
First, the creditor must get a court judgment against you. Then the creditor files a sworn affidavit with the court clerk. In this affidavit, the creditor says he believes your bank or another person (called a garnishee) has your money or property — or owes you money. Then the creditor files a “Garnishment Notice” and sends a copy to you. Last, the creditor files a set of written questions (called interrogatories) with the court clerk, which the garnishee must answer, file with the court, and send a copy to you. In the answers to the interrogatories, the creditor discovers how much non-exempt money or property the garnishee holds.
When the court clerk has all this information, the clerk gives the creditor a “Garnishment Summons” to serve on the garnishee. This summons tells the garnishee when to file his answer to the interrogatories and the date of the court hearing. Then the garnishee must freeze the amount of non-exempt money or property it holds up to the judgment amount, and follow any other court instructions. At the hearing, the court will decide whether the garnishee should turn over the money to the creditor.
The Garnishment Notice
The notice the creditor sends to you must be in a specific form. It must identify the court case and tell you that the creditor is taking legal action to force your bank or other property holder to give it money from your account to satisfy the judgment. In addition, this notice must tell you the time and date of the court hearing. Also, the notice must tell you that the amount of money or property that may be garnished is limited by law. Plus, it must explain the amount of money that is exempt and protected from garnishment.
What’s more, the notice must explain that you have the legal right to request a hearing to challenge the garnishment or to ask the court to affirm that some of your money or property is exempt. And last, the notice must tell you how to request that hearing.
How Much Money Can be Taken From Your Bank Account?
When the garnishee freezes money in your bank account, you cannot use this money to cover your checks. You must be extra careful not to bounce checks, since you can no longer spend this money. In fact, once your money is frozen, you should think of the money as not being in your account. Later, the court can order that those frozen funds be given to the creditor. To prevent your funds from being frozen, you should withdraw the money from your account before the bank receives the summons. To process your garnishment, the bank may charge you a small fee.
Make Sure the Bank is Freezing the Right Amount in Your Account
By law, the bank is allowed to freeze only funds that are non-exempt. But the bank may not know how much of the money in your account is exempt. So if your bank freezes any part of your account, make sure you tell the bank and the creditor if any of the frozen money is exempt.
For example: The law allows you a “wildcard” exemption of $4,000 in money or property of your choice. So, you can choose to have the court declare as exempt up to $4,000 in the frozen account.
What’s more, most government benefits, such as Social Security, are exempt. So if all the money in your account is from exempt government funds, then your entire account is exempt.
If the bank will not unfreeze exempt funds, you may go to court and have the court order the bank to release the funds. The Garnishment Notice explains how to request a court hearing to have the judge declare your funds exempt.