If you are aware that a debtor is working and earning an income, a collection agency New Jersey creditors trust may help you with the process of garnishing his or her wages. There are multiple laws regarding the garnishment process that may affect your efforts. The best way to successfully garnish a debtor’s wages is to first be educated about the relevant law.
Wage garnishment laws typically affect the income individuals receive from work sources. Income earned through Social Security unemployment compensation and other non-work income is typically not eligible for garnishment. Some state laws do not allow wages from social programs, such as work incentives, to be garnished at all. A collection agency New Jersey creditors rely on may be able to help you determine whether your debt is eligible under exempted income regulations.
Before you can have a debtor’s wages garnished, you are typically required to obtain a civil judgment for the debt. You may then complete a writ of garnishment, which is served to the debtor as well as his or her employer.
Federal Income Restrictions
Under the Consumer Credit Protection Act, which applies to all 50 states, territories and Washington, D.C., the relevant law that results in a lower garnishment rate is the one that takes effect. Federal law uses two primary calculations, including disposable earnings and the minimum wage. The Consumer Credit Protection Act requires employers to calculate garnishment based on the employee’s disposable earnings. Garnishment can only account for 25 percent of the employee’s disposable earnings. The second calculation used by federal law to determine appropriate wage garnishment restrictions is the minimum wage. In 2015, the federal minimum wage was $7.25 per hour. You may only garnish the difference between the debtor’s disposable earnings and 30 times the federal minimum wage. If the employee had less than $300 in disposable income, the amount you can garnish is $300 less than $82.50, or 30 times the minimum wage. When determining which of the two calculations to use, the government automatically opts for whichever garnishment is lesser. If the employee earns less than 30 times the federal minimum wage, you may not withhold anything from his or her income.
Disposable earnings refers to the remainder of the debtor’s income after federal, state, and local taxes as well as Social Security taxes, unemployment insurance, and other withholdings. Voluntary deductions are not included in this protected sum, nor are life insurance premiums or retirement plan contributions.
State laws regarding wage garnishment typically follow federal law. Some states follow federal law exactly, while others may base minimum wage calculations on the state rather than the federal minimum wage. The federal minimum wage is only a base rate, while many states have a higher minimum wage.
Child Support and Alimony
The Consumer Credit Protection Act allows creditors to garnish 50 percent of a debtor’s disposable earnings if the debt is for alimony or child support. In such cases, the debtor must have another spouse or child. Otherwise, 60 percent of his or her earnings may be garnished. Child support garnishments often follow a different structure, and a writ of garnishment is usually not required to collect.
Non-Tax Debts and Recourse
Federal agencies are allowed to garnish no more than 15 percent of an employee’s disposable earnings, or 10 percent if the debt is defaulted under a federal student loan. The Consumer Credit Protection Act also prevents employers from retaliating against employees for having debt that leads to wage garnishment. However, employees with two or more garnishments may be discharged.
Contact a Collection Agency New Jersey Creditors Trust
Contact Snellings Law LLC today at (973) 265-6100 for more information on collecting debt through wage garnishment. Working with a collection agency New Jersey creditors rely on to pursue collections can make the process easier.