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What is a wage
garnishment?
Wage garnishment is a procedure through which some portion of a person’s
(debtor) earnings is withheld by an employer (garnishee) for the
payment of a debt to a creditor (person who is owed the money).
What amount
can be garnished?
Federal law limits the amount of earnings that may be garnished to
25 percent of the debtor’s disposable income. (Disposable earnings
are the amount of earnings left after legally required deductions
e.g., federal, state taxes, Social Security, unemployment insurance
and medical insurance.)
However, for individuals earning minimum or near minimum wage, the
debtor must be left with an amount equal to 30 times the federal
minimum hourly wage.
Example
Debtor earns $7.15 per hour, (minimum wage).
Weekly gross earnings = $290.00 (40 hrs. x $7.25).
Subtract deductions; disposable earnings = $232.00.
30 x $7.25 (minimum wage) = $217.50.
$232.00 - $217.50 = $14.50.
Amount that can be garnished: $14.50 each week.
Disposable earnings are the amount of earnings
left after legally required deductions (e.g. federal,
state taxes, Social Security, unemployment insurance
and medical insurance.)
What are legal deductions?
What are the restrictions on wage garnishment?
The
amount of pay subject to garnishment is based on an employee's
"disposable earnings" which is the amount left after legally required
deductions have been made for federal, state, and local taxes, Social
Security, unemployment insurance, and State employee retirement
systems.
Other
deductions, such as those for union dues, health and
life
insurance, contributions to charitable causes, voluntary wage
assignments, purchases of savings bonds, and payments to employers
for payroll advances or purchases of merchandise, are not required
by
law and may not be subtracted from gross earnings when calculating
the amount of disposable earnings.
Source: Title
III of the Consumer Credit Protection Act (CCPA)
What are the steps?
What
Are the Steps?
1. Before you can garnish wages, you must obtain a final judgment
or order against the debtor in court.
2. After you obtain a judgment, you file a Request for Garnishment
on Wages (DC/CV65). To complete the form, you need to know the name
and address of the debtor’s employer, the amount of the judgment
and any additional money owed (such as court costs and interest.)
3.
A writ or court order is then "served" or delivered
to the debtor’s employer (garnishee). (Service
is not permitted by ordinary mail. Service must be provided
by the
sheriff or constable, by "return receipt requested" registered
mail, or by a person at least 18 years of age and not
a party to the suit.)
Responsibilities
of garnishee
Upon receipt of the writ, the garnishee must:
1.
Reply to the writ within 30 days of receipt, indicating
on the form whether the debtor is employed, the rate
of pay, and any prior garnishments on wages.
2.
Determine the amount of the “garnishable wages” for
each pay period and withhold this amount from the employee.
3.
Report and distribute to the creditor or creditor’s
attorney the total amount of wages withheld for the month,
within 15 days after the close of the employee’s
last pay period in the month. If another garnishment
or judgment is received, follow the same procedures,
but remittance to a second or subsequent creditor is
not made until the first judgment is paid in full. When
one judgment is paid, the lien of the next one is in
effect.
4.
Notify court and all parties if the debtor stops working
or is terminated. The garnishment terminates 90 days
after end of employment unless the debtor is
re-employed during that period.
Penalties
If the garnishee fails to comply with the provisions of the law,
he or she may be cited for contempt of court and assessed attorney’s
fees and court costs.
Responsibilities of creditor
1.
If an alleged employer
reports that the debtor
is not employed, creditor
must file a request
for a hearing within
15 days, or the court
may dismiss the garnishment.
File your request in
writing or on Request/Certificate
of Service/Order form
(DC1).
2.
When you receive payment from any garnishment on wages
or from any other payments or credits, you must provide
a Judgment Creditor’s Monthly Report (DC/CV 66)
to both the debtor and garnishee within 15 days after
the end of any month in which payments are received.
(You do not have to file this form with the court.) This
form shows all payments credited during that month and
the method used to determine the amount withheld.
3.
Payments received from any source shall be credited,
first against accrued interest on the unpaid balance
of the judgment principal; second, against the principal;
and third, against attorney’s fees and costs assessed
against the debtor.
4.
File with the court an Order of Satsfaction within 15
days after the judgment has been paid in full.
Penalties
If the creditor fails to comply with the provisions of the law, the
garnishment may be dismissed and creditor may be assessed attorney’s
fees and costs.
Frequently
asked questions
What
must be sent to all parties involved?
All motions, statements, answers to interrogatories and other papers
filed with the court must be sent to all parties (creditor, debtor,
garnishee and attorney, if any) involved in the case.
Can an
employer discharge an employee because of a garnishment?
No,
an employee may not be discharged because
wages are subject to garnishment for any
one indebtedness within a calendar year.
An employer who willfully violates this
provision is guilty of a misdemeanor and
subject to a fine not exceeding $1,000,
imprisonment not exceeding one year, or
both.
Can a debtor’s
bank account be garnished?
Yes. To garnish a bank account, file a Request for Garnishment of
Property Other than Wages (DC/CV 60). You must provide the name and
address of the debtor’s financial institution. The garnishee
is served and must reply within 30 days with a Confession of Assets,
a list of assets belonging to the debtor held by the bank. You will
receive a copy.
After 30 days have passed since the original request, you file a
Request of Judgment-Garnishment (DC/CV 62) with the court and send
copies to both the debtor and garnishee. If the judge decides in
your favor, the garnishee will be ordered to pay the funds from the
debtor’s account.
Do the same rules
apply for tax liens?
No, garnishment of wages due for state or federal income taxes is
different.
Can
wages be garnished for child or spousal support?
Yes, but the District Court does not handle these cases. You must
file in
circuit court.
Can
a debtor or garnishee defend against a garnishment?
Yes. A debtor or garnishee has the right to object to a garnishment
at any time. To object, file an appropriate motion with the court.
How
can I find out more?
Laws governing garnishment can be found in Commercial Law of the Annotated
Code of Maryland.
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