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How is Wage Garnishment Calculated? Understand How It Works and How to Stop It

in Rants

If you are juggling different financial responsibilities (especially in the context of crippling inflation), it could be easy to lose track of some or hard to keep up with all, leading to wage garnishment. Your creditor might sue you, and the court could grant a wage garnishment. A wage garnishment is an order to your employer to withhold a portion of your earnings to pay the creditor. A wage garnishment can also be granted for payment of child or spousal support.

A wage garnishment order is often unexpected. So, when you receive it, it is important to read through the order. Identify why the wage garnishment has been placed, how much will be garnished, and then seek legal help to stop it.

How Much Will My Employer Withhold to Fulfill the Wage Garnishment?

When your employer gets the wage garnishment order from the court, they will withhold a certain amount from your wage. Using a wage garnishment calculator, you can estimate how much will be garnished.

Besides the estimate, a wage garnishment calculator may also show the wage garnishment cost and offer insights on what you can do to stop the garnishment. A wage garnishment calculator is generally easy to use; unlike others, you won’t need to sign up or input your email address. Note that the output will be an estimate, not a guarantee of the amount.

What is Considered When Calculating Wage Garnishment?

Different factors are considered in computing wage garnishment. Each state has unique laws on wage garnishments, while some don’t allow wage garnishment. So, we have wage garnishment calculators for every state. Select your state when using our calculator. You can use a wage garnishment calculator to give an estimate how much you may be garnished.

In calculating wage garnishment amounts, there are two primary considerations. The applicable minimum wage of the employee and their disposable income. Based on this information, you can decide how much to withhold from their paycheck.

However, the law states that the maximum amount that can be garnished is the lesser of:

  •     50% of the difference between the employee’s applicable weekly minimum wage and their disposable earnings or
  •     25% of their weekly disposable income.

However, check the laws in your state. Also, check for updates on the law since the rules constantly change.

Will the Garnishment Calculator Give Similar Results Across My State?

No. There are other factors that will affect the results. For instance, the calculator considers the minimum wage. So, the results for someone living in Washington will differ from those of someone living in Seattle.

Below is the wage garnishment calculators that you can take for your state:

How do Employers Decide How Much to Withhold?

For accuracy and to comply with state laws, employers use an employer wage garnishment calculator tool to decide how much wage to withhold. Unlike the regular calculator you can use to know how much is being garnished, the calculator designed for employers is quite different and complicated.

Higher Order Priority in Wage Garnishment Calculation

There are different reasons you might get a wage garnishment order. But there is a higher priority order that the courts follow. Before discussing this order, let us discuss how a creditor can get a wage garnishment order against you.

If you should be making payments, e.g., for loan repayment or child support, and you default, the owed party can sue you. During the hearing, the owed party will present their case and ask the court for a writ of execution. They will also submit an earnings withholding along with their request for a writ of execution—a document to authorize your employer to withhold your earnings.

If the court grants the wage garnishment order, they will notify your employer immediately. When you have different withholding orders, their priority will differ. Here is the higher-order priority followed in a state like California:

  •     Child support
  •     IRS and other owed taxes
  •     Payment to a dependent adult
  •     Withholding order

The order of priorities will depend on the state. States like North and South Carolina, Pennsylvania, and Texas forbid wage garnishment orders for unpaid debts.

How Can I Stop Wage Garnishment?

Although a decision from the courts may seem final, it isn’t. You have several options to try and stop the wage garnishment order against you. When using our calculator to estimate how much money will be withheld from your weekly pay, our calculator will suggest and compare these options. They are:

1. File an Exemption

When you get the wage garnishment letter, you can object to it in writing. Usually, the instructions on how to file an exemption will be included in the document. Therefore, read the order thoroughly.

If there are no details on how to file an exemption, consult a legal expert on how to go about it. Furthermore, working with a legal expert will increase your chances of stopping the garnishment than doing it alone. Although you are legally allowed to file an exemption, most garnishments are valid; therefore, exemptions are hard to receive. Is your income protected? Use this example letter to file your exemption and stop wage garnishment.

2. Declare Bankruptcy

If filing an exemption does not work, or your legal counsel advises against it, you can choose to file for bankruptcy. When you declare bankruptcy, the wage garnishment orders against you will be lifted, especially orders by creditors for outstanding debt. For example, filing for bankruptcy is a smart solution if you recently lost your job, are living paycheck to paycheck or your earnings are below the median income in your state.

You can file Chapter 7 or 13 bankruptcy, depending on your financial situation. Chapter 7 bankruptcy is more popular in the United States because it is more affordable. However, do your research, as you risk losing some assets to liquidations. Note that you will only lose assets not protected by the bankruptcy exemptions in your state.

You also need to be living below the median income in your state to be eligible to file for Chapter 7 bankruptcy. You can take a bankruptcy means test and see if you qualify. If you don’t, you may be able to file for Chapter 13 bankruptcy.

Chapter 13 bankruptcy is ideal if you have some income. It helps you get rid of debt by adjusting your repayment plan. When you file for Chapter 13 bankruptcy, the court will ask you to draft a new debt repayment plan that you can spread for three to five years. If you qualify for Chapter 7 bankruptcy, but your wage garnishment order still stands, you can file Chapter 13 bankruptcy to get the order discharged. Note that Chapter 13 bankruptcy takes considerably longer to execute than Chapter 7.

How Much Will I Need to File for Bankruptcy?

The cost of filing for bankruptcy depends on the type of bankruptcy you wish to file. For Chapter 7, you will pay an average of $338, while Chapter 13 will cost an average of $313 in filing fees.

Besides filing fees, you might need to pay attorney fees as well if you choose to use one. We recommend using the services of a bankruptcy attorney to simplify the process and increase your chances of the court granting debt discharge. Fortunately, a majority of bankruptcy attorneys are willing to work out payment plans where you can pay their fees in installments. Some Chapter 13 bankruptcy attorneys could also add their fees to the repayment plan.

Do the fees seem a little too much for you at the moment? If your income is below the poverty threshold in your state, the state can waive your filing fees. Before declaring bankruptcy, consider other debt-relief options, and compare the costs.

You can also consider other options besides bankruptcy such as debt settlement or debt management.

3. Work with a Debt Settlement Company

You can choose to settle the debt with the company by seeking the services of a debt settlement company. This option, however, works for debts and is not effective for spousal or child support.

What Do I Do Next?

Once you are notified about the wage garnishment order, identify why the order was placed. Then, determine how much will be withheld from your pay using our wage garnishment calculator. Let it play out if the amount is not very significant and you are comfortable with the deduction. If you aren’t, consider the above options to stop the garnishment.

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