A wage garnishment, also known as a wage attachment or wage deduction, is Court order that instructs your employer to withhold a specific amount of money from your paycheck and send it directly to a creditor. In most cases, a creditor cannot garnish your wages without obtaining a court-issued money judgment first. For example, if you have outstanding credit card payments or a medical bill, those creditors cannot garnish your wages unless they sue you first and get a Court Judgment. However, whether or not a creditor needs to sue you before garnishing wages depends on the type of debt.
Which Debts Can Be Automatically Garnished Without a Lawsuit?
Wage Garnishment for Unpaid Child Support
If you owe child support, federal law allows the government or the creditor to garnish your wages without obtaining a court judgment. Court orders for child support automatically include an income withholding order. The order will be forwarded to your employer, and the designated amount will be subtracted from every paycheck. 750 ILCS 28/20(a) Moreover, if you fall behind in child support payments, the other parent can seek an extra wage garnishment order from the court.
The wage garnishment limits for unpaid child support are as follows:
- Up to 50% of disposable earnings if you are currently supporting a spouse or a child not covered by the current order.
- Up to 60% of earnings if you are not supporting a spouse or child in a separate case.
- An additional 5% may be taken if you are more than 12 weeks in arrears (15 U.S.C. § 1673).
Wage Garnishment for Federal Student Loans in Default
For federal student loans in default, the U.S. Department of Education or its collecting entity can garnish up to 15% of your pay, a process known as “administrative garnishment.” However, you are allowed to retain an amount equivalent to 30 times the current federal minimum wage per week, as federal law protects this income level from garnishment. It’s crucial to emphasize that these regulations only apply to Federal Loans. Private student loan lenders, on the other hand, must follow traditional procedures, which involve filing a lawsuit to garnish wages.
Unpaid Taxes Garnishment Limits
If you owe back taxes, the federal government can garnish your wages (referred to as a “levy”) without a court judgment. The weekly exempt amount is determined based on the total of your standard deduction and the aggregate amount of deductions for personal exemptions allowed in the taxable year. This total is then divided by 52. If you haven’t specified your standard deduction and dependent information, the IRS bases the exempt amount on the standard deduction for a married person filing separately with only one personal exemption.
It’s important to note that state and local governments may also have the authority to garnish wages for unpaid state and local taxes. To obtain more information, contact your state labor department.
Which Forms of Income Are Exempt from Garnishment?
Welfare and various public or government benefits enjoy protection from creditors. This safeguard includes:
- Social Security Disability
- ERISA Protected Retirement Accounts (not money withdrawn from these accounts)
- Dependent/Survivor Benefits
- SSI (Supplemental Security Income)
- TANF (Temporary Assistance for Needy Families)
- General Assistance
- SNAP (Food Stamps)
- Unemployment Insurance Benefits
- Most Veterans’ Benefits
- Most Child Support and Maintenance Income
This protection means that creditors are unable to seize any or all of these benefits to recover the amount owed by the debtor. If your income doesn’t fall within these protected categories, you might be at risk of wage garnishment. In such cases, the crucial question arises: How much of your income can be garnished?
Wage Garnishment Limits in Illinois
Under Illinois law, a judgment creditor can garnish your wages up to the lesser of two amounts:
- Up to 15% of your gross wages for that week.
- The amount of weekly disposable earnings remaining after deducting the Illinois hourly minimum wage (or the federal minimum wage if it surpasses the Illinois minimum wage) multiplied by 45.
- As of 2024, Illinois Minimum wage is $14 per hour and Federal Minimum Wage is $12.90.
Understanding “Disposable Earnings”
“Disposable earnings” refer to how much of an individual’s earnings are left after deducting any amounts required by law to be withheld (735 Ill. Comp. Stat. § 5/12-803).
Wage Garnishment Example
To determine the maximum amount an employer can take from a debtor’s paycheck, follow these steps:
- Multiply the debtor’s gross weekly wages by 0.15, record this result.
- Subtract $630 from the debtor’s net (take-home) weekly wages, and note this number.
The smaller of these two numbers is the maximum amount the creditor can garnish from the debtor’s paycheck per week. If the lower number is zero, the creditor cannot garnish any of the debtor’s wages. Additionally, if your pay frequency differs from weekly, you can convert your earnings to a weekly basis according to your pay period to figure out your weekly pay.
Furthermore, if you hold multiple jobs, the maximum garnishment limit still applies, but it’s determined by your combined income from all jobs. This means that a creditor can garnish your secondary paycheck too, up to a maximum of 15% of your total gross weekly earnings.
How Long Does Wage Garnishment Last?
Wage garnishment doesn’t go away until you’ve completely paid off what you owe or until some legal steps are taken to put a stop to it. If you’ve got a hefty debt, a garnishment could be part of your paycheck for quite a few years. The reason? In Illinois, legal judgments, for amounts over $25,000, earn interest at a rate of 9% per year, and for amounts under $25,000, it’s 5%. So, the longer it takes to settle the debt, the more it can add up.
In a nutshell, wage garnishment is a tool creditors use to make sure they get their money. But here in Illinois, there are protections in place for folks who owe money. Learning about these protections can help you handle wage garnishment challenges and figure out how to get some relief when you need it.
How to Protect Your Wages from Garnishment
Upon receiving notice of a wage garnishment order, you may have the opportunity to shield or “exempt” a portion or all of your wages by filing an exemption claim or raising an objection. The specific procedures for objecting to a wage garnishment hinge on the nature of the debt the creditor is pursuing.
Available Exemptions under Illinois Law
Illinois law offers various exemptions to help individuals undergoing wage garnishment to meet essential living expenses. These exemptions closely mirror the bankruptcy exemptions.
These include:
- Head of Household Exemption: Designed for primary breadwinners or those supporting dependents, this exemption protects a larger portion of their wages.
- Low-Income Exemption: Illinois safeguards low-income earners from extensive wage garnishment. Wages cannot be garnished to the extent that earnings fall below a threshold set at 45 times the federal minimum wage.
- Other Exemptions: As noted above, certain incomes such as Social Security, Supplemental Security Income (SSI), unemployment compensation, and specific retirement benefits, are exempt from wage garnishment in Illinois.
Applying for Exemptions in Illinois
In the face of wage garnishment, it is advisable to promptly seek legal counsel to understand available exemptions. Typically, one must file a claim for exemption with the court, providing evidence of eligibility. The court will review the claim, and if approved, adjust the garnishment accordingly. If this fails you are likely facing a permanent wage deduction or even an additional citation to discover assets.
Swift Debt Relief Through Bankruptcy
As a Chicago Bankruptcy Attorney, I am here to guide you towards the quickest and most painless way to solve your financial struggles—filing for bankruptcy. Once you have filed bankruptcy, all wage garnishments are immediately halted. A creditor cannot garnish your wages after a bankruptcy has been filed without violating the automatic stay. This approach not only offers a rapid resolution to your debts but may also provide an opportunity to recover some of the wages that were recently garnished as a preferential payment. Timing your filing is important, and now might be an opportune moment for you to consider bankruptcy. By taking this step, you can swiftly address your financial difficulties, gaining relief and paving the way for a fresh start. I am here to support you through this process and help you navigate towards a more stable financial future.
