wage garnishment
A court-ordered process where a portion of a debtor's paycheck is withheld by their employer and sent directly to a creditor.
Example
“After the judgment the creditor obtained wage garnishment taking 25% of his paycheck.”
Memory Tip
GARNISH — money is taken from your paycheck before you ever see it.
Why It Matters
Wage garnishment directly impacts your take-home pay and ability to cover living expenses, making it one of the most serious consequences of unpaid debt. Understanding this process helps you recognize the importance of addressing debts early before creditors pursue legal action, and knowing your rights during garnishment protects you from illegal collection practices.
Common Misconception
Many people believe that wage garnishment can take all or most of their paycheck, but federal and state laws actually limit how much can be garnished. In most cases, creditors can only garnish up to 25 percent of your disposable income or the amount by which your weekly income exceeds 30 times the federal minimum wage, whichever is less.
In Practice
If someone earns 2000 dollars per week and owes 5000 dollars to a credit card company, a court may order their employer to withhold up to 500 dollars from each paycheck until the debt is paid. This means the employee receives only 1500 dollars instead of 2000 dollars while the 500 dollars goes directly to the creditor every pay period until the full debt is resolved.
Etymology
From Old French 'garnir' meaning to equip or warn.
Common Misspellings
Compare debt consolidation options
Related Terms
More in debt
Other debt terms you should know
Need financial definitions?
Clear definitions for 2,500+ finance, insurance, and investing terms.