Wage Garnishment Exemptions: Income Creditors Can’t Touch

Wage garnishment happens when creditors take money directly from your paycheck or bank account. Federal and state laws protect certain income from this collection method.

You have rights. Many types of income cannot be garnished. Understanding these protections can help you keep the money you need to survive.

What Income Is Protected From Wage Garnishment?

Not all income can be seized through garnishment or bank levies. Federal and state laws protect specific income sources called exempt income.

If your money comes from protected sources, you can stop garnishment or get funds returned.

Two main categories exist:

• Federal exemptions for federal benefits
• State exemptions for state benefits

Federal law protects low-income earners too. Your paycheck cannot be garnished if your weekly disposable earnings are less than $217.50. Disposable earnings are what remains after taxes and mandatory deductions.

Some states offer even stronger income protections.

Federal Income Exemptions

Federal law protects certain income nationwide. Protected income includes:

• Social Security benefits
• Supplemental Security Income (SSI)
• Veterans benefits
• Federal employee or military retirement
• Federal disability or survivor benefits
• Railroad retirement benefits

These funds stay safe from garnishment in most cases. Exceptions include unpaid federal taxes, child support, or federal student loans.

State Income Exemptions

States protect additional income types from garnishment. Each state has unique laws. Commonly protected income includes:

• Unemployment benefits
• Workers’ compensation
• Public assistance like TANF or food stamps
• Pension or retirement income
• Life insurance payouts
• Child support or spousal support you receive

Check your state’s exemption laws to understand your full protections.

How to Protect Your Exempt Income

You can protect exempt income during a lawsuit or after receiving garnishment notice. Action is possible at both stages.

Protection During a Lawsuit

You can respond to the lawsuit before the court enters judgment. Tell the court your income is exempt. Show that your income comes from protected sources like Social Security or unemployment.

Courts may stop the case if all your income is legally protected.

Worried about responding alone? Our partner Solo helps you draft an answer letter for a small fee. They’ve helped over 300,000 people respond to debt collection lawsuits.

Protection After a Garnishment Order

You can still act after receiving a wage garnishment order. File a claim of exemption with the court. Courts must stop or reduce garnishment on legally protected income.

The process works like this:

1. Review the garnishment notice carefully. Identify who’s collecting, how much they claim, and which court issued the order.
2. Check if your income is exempt. Compare your income sources to protected types.
3. Get the exemption form from the court. Search for Claim of Exemption or Exemption Claim Form online.
4. Fill out the form and gather proof. Include benefit award letters, pay stubs, or bank statements.
5. File the form with the court. Submit to the same court that issued the garnishment order. Deadlines are often just 5-10 days.
6. Send copies to the creditor and levying officer. Your state may require this step.
7. Attend any scheduled hearing. Explain where your income comes from and why it’s protected.

The court will limit or stop garnishment if your income qualifies for protection.

When Exemptions Don’t Apply

Important exceptions exist to exempt income rules. You usually cannot use a Claim of Exemption for certain debts.

The IRS and U.S. Department of Education can garnish normally protected income. Federal agencies can take money for unpaid taxes or defaulted student loans.

The IRS can garnish wages and bank accounts for tax debt. They can also take portions of certain federal benefits, including Social Security.

The Department of Education has similar powers for federal student loans. These agencies don’t need court judgments first. They send notice, give you time to respond, then start garnishment.

How to Avoid Wage Garnishment

You have options before garnishment starts. Taking action now protects your income and financial stability.

Negotiate a Payment Plan

Contact creditors directly or work with a nonprofit credit counseling agency. Our partner Cambridge Credit Counseling helps you set up affordable payment plans that prevent court action and garnishment.

Get Legal Help Early

Legal aid organizations help low-income people with debt lawsuits. A legal aid lawyer can help you respond to cases, raise exemptions, or challenge lawsuits. Early help makes a significant difference.

Consider Bankruptcy Protection

Bankruptcy stops debt collection and prevents wage garnishment. Chapter 7 bankruptcy erases credit card debt, medical bills, and personal loans. It protects exempt income like Social Security and unemployment benefits.

Bankruptcy stops most garnishments immediately. Speak with a bankruptcy attorney for free to understand your options and whether you qualify for debt discharge.

Take Control of Your Financial Future

Understanding wage garnishment exemptions gives you power over your money. Federal and state laws protect essential income from creditors.

You don’t have to face garnishment alone. File exemption claims to protect your income. Negotiate payment plans before lawsuits begin. Consider bankruptcy for a fresh financial start.

Your protected income remains yours. Know your rights and use the tools available to defend them.