Wage garnishment happens when an employee has an unpaid debt (unrelated to employment) and the creditor of the debt seeks payment. Generally speaking, your employer must garnish your wages when ordered to do so. But, there are limits on how much of your earnings may be garnished, and on how your employer responds to the garnishment. And, some states go further than federal law in limiting the amount an employer may withhold from your wages.
Texas Generally Prohibits Wage Garnishment For Most Types of Debts
It's important to understand that wage garnishment for most debts is highly restricted in Texas. Creditors typically cannot garnish your wages in Texas for unpaid credit card bills, medical bills, or other consumer debts. The only exceptions are:
- Court-ordered child support and spousal maintenance: These are automatically withheld from your paycheck if you fall behind on payments. (Tex. Fam. Code § 205.004)
- Income taxes: The state or federal government can garnish your wages for unpaid taxes.
- Defaulted federal student loans: The federal government can garnish your wages for defaulted student loans. (20 U.S.C. § 1095a)
In Texas, the state law provides significant protection to workers regarding wage garnishment. Texas is one of the few states (along with South Carolina, Pennsylvania, and North Carolina) that generally prohibits wage garnishment for most types of debts.
See also
- The Texas state government Debt Collection Guide.
- Texas Law Help - Garnishment In Debt Collection
Exceptions
However, there are exceptions. Even in Texas, your wages can be garnished for:
- Child support and alimony
- Federal student loans
- Unpaid income taxes
- Court-ordered restitution in criminal cases
For child support or alimony, federal law allows up to 50%-60% of your disposable earnings to be garnished. If you owe federal student loans, the Department of Education can administratively garnish up to 15% of your disposable income. If you owe back taxes, the amount the IRS can take depends on your deduction rate and number of dependents.
Your employer can garnish your wages in Texas if ordered to do so. When an employer garnishes your wages, it withholds a portion of your pay and gives it to another person or business to whom you owe money. Under federal law, Texas employers may garnish a portion of an employee’s wages because the employer has been ordered to do so by a court or through some other legal procedure by a creditor.
Your wages may be garnished in Texas if you have:
- failed to pay child or spousal support
- defaulted on a student loan, or
- unpaid taxes due and the taxing authority seeks payment.
Can I Be Fired Because of a Wage Garnishment?
Your employer cannot fire you because your wages have been garnished for a single debt, under federal garnishment law. However, your employer can fire you if your wages are garnished for a second or subsequent debt. Your employer cannot fire you because you have to pay child or spousal support.
How Much of My Earnings Can Be Garnished?
Federal law also limits the amount of your earnings that your employer is allowed to garnish for certain types of debt such as credit card debt. In any given workweek, your employer cannot garnish more than the lesser of:
- 25% of your disposable earnings (your gross pay, including overtime pay, minus mandatory deductions, such as social security and unemployment insurance), or
- the amount by which your weekly earnings are greater than 30 times the federal minimum wage.
But, federal law allows a greater amount of an employee’s wages to be garnished for child support, bankruptcy, or federal or state tax debts.
Garnishment for Child or Spousal Support, Back Taxes, and Bankruptcy
Other types of debt are not subject to the federal limit discussed above. Up to 50% of an employee’s earnings may be garnished for child or spousal support under federal law if the employee is also supporting a current spouse or child. If the employee is not supporting a current spouse or child, the amount subject to garnishment is up to 60%. If you are already in arrears for child or spousal support, an additional 5% may be garnished.
The IRS can also garnish more of your wages than other creditors, and it can do so without a court order. Once the IRS sends a tax levy notice to your employer (who must give you a copy of the levy notice), your employer must generally comply with garnishment. You will receive an exemption claim form to fill out and return to the IRS to try to lower the amount garnished. The amount the IRS garnishes depends on how many dependents you have and your standard deduction amount, but the percentage of earnings garnished by the IRS can be quite large. State and local taxing agencies also have the right to garnish your earnings for unpaid taxes. Many states limit the amount that these agencies can take.
And, the federal limits do not apply to certain bankruptcy court orders and unpaid federal and state tax debts. The limit also does not apply when you have voluntarily agreed that your employer may turn over a specific amount of your earnings to a creditor.
Special Rules for Student Loan Defaults
If you default on a student loan, the U.S. Department of Education (or other student loan collection agency) can garnish up to 15% of your earnings, even without a court order. Your employer must withhold this amount upon written notice from the agency. But, the student loan agency must give you at least 30-days’ notice before the garnishment is to begin, informing you of the amount you owe, how to get copies of loan records, how to set up a voluntary repayment schedule, and how to request a hearing on the proposed garnishment.
Citations
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Federal wage garnishment limits are set forth in the Consumer Credit Protection Act (CCPA), specifically at 15 U.S.C. § 1673.
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Child support and alimony garnishment limits, which can be more than the standard CCPA limits, are laid out in 15 U.S.C. § 1673(b)(2).
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For federal student loans, wage garnishment is authorized by the Higher Education Act at 20 U.S.C § 1095a.
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For tax debts, the Internal Revenue Code authorizes the IRS to levy or garnish property or rights to property, which can include wages. See 26 U.S.C. § 6331.