wage or other income garnishment

Can a Debt Collector Garnish Wages or Other Income?

It depends... Debt collectors may or may not be able to garnish your wages or other income.

It depends on several factors:

Type of income
What state you live in
What the debt is for

In most cases, debt collectors cannot garnish the following types of income:

social security
disability
retirement
child support, and
alimony.

There are exceptions to this rule, so you must check your state's particular laws.

But, exceptions are usually not granted for federal (or state) taxes or student loans in delinquent or past due status.

As of May 1, 2011 (the same day as the death of Osama Bin Ladin), banks are required to review accounts for automatically deposited federal benefits (Social Security and Supplement Security Income, veterans benefits, railroad retirement, civil service retirement, and federal employee retirement) before they honor or allow a debt collector to withdraw money for a garnishment order.

If your bank receives a garnishment order, it is required to review your account for the previous two months and must protect any federal benefit AUTOMATICALLY deposited during that time frame or the current balance of the account, whichever is less.

For example, if you receive $1500 each month from Social Security benefits and an additional $1,000 a month in federal disability benefits, the bank would protect $5,000 or your current balance if it is less from garnishment.

Any amount above $5,000 in the account would be subject to garnishment.

Again, we are talking ONLY ABOUT RETIREMENT INCOME THAT IS AUTOMATICALLY DEPOSITED for you! If you receive a check and deposit it yourself, this law doesn't apply.

And remember, this law is not going to protect you from money owed to the Federal or State Government or for back child support, so be aware.

If you are retired and have debt that has gone to collections, I recommend that you go to your bank and sit down with the manager or someone who really knows, and make sure you account is flagged as RETIREMENT INCOME ONLY.

If they will not honor your request, I'd look around for a bank that does.

At this time, Pennsylvania and Texas are the only two states that I am aware of that restrict wage garnishment.

In TEXAS, your wages are exempt or protected from garnishment EXCEPT FOR:

Child Support
Alimony
Taxes
Federal Student Loans

In PENNSYLVANIA, wages are exempt or protected from garnishment EXCEPT FOR:

child or spousal support,
obligations relating to a final divorce distribution
back rent on a residential lease
certain types of taxes
student loans, and
court ordered restitution in criminal matters

In other states, your wages can be garnished. Usually, the amount is 25% of your net income, (after tax deductions).

Also, most states, like OREGON, have an amount of earned income, not retirement income that will be exempt from garnishment. In other words, if you have a small income, it may be exempt from garnishment.

Bottom line....

If you have unsecured credit: