When Creditors Can Garnish Your Wages, Put Liens on Your Home, or Take Your Assets
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When Creditors Can Garnish Your Wages, Put Liens on Your Home, or Take Your Assets
If you are in serious debt and afraid that a creditor can garnish your wages or your property, it pays to know how the process works, if only for some temporary stress relief.
Things To Know
- In most cases, a creditor must sue you to get your wages.
- Exceptions include alimony, child support, taxes, and student loans.
Except in three situations discussed below, a creditor can’t simply decide on its own to garnish your wages or put a lien on your home and then proceed from there. First it must sue you and get a court judgment. If it succeeds, it can garnish a maximum of 25% of your wages, and you can contest this in court if you wish.
There are three exceptions:
- Alimony or child support. Up to either 50% or 60% of your wages can be garnished by the state, depending on whether you are supporting another spouse or child.
- Taxes. The IRS can garnish your wages without a court order.
- Student loans in default. The federal government can take a portion of your wages.
In the event that you get a tax refund, various creditors may be allowed to take a bite out of it. Consult your tax advisor or legal attorney if this should be a concern of yours.
What about unemployment benefits?
In most cases, unemployment benefits cannot be garnished. Exceptions occur if you owe back taxes to your state or if you owe alimony or child support.