California Wage Garnishment Limits

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READER QUESTION

If my paycheck is garnished, do they have to leave me enough to live on?

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Bills.com Resident Expert
Jan 27, 2012
HIGHLIGHTS
  • Know your rights if your wages are being garnished.
  • Learn how a judgment can lead to a lien or bank levy.
  • Make sure the amount garnished does not exceed legal limits.
BILL'S ANSWER

A certain amount of income is exempt from attachment in a wage garnishment. The amount exempt varies by state. It makes a difference who is levying your paycheck. The amount that can be levied can also vary who is trying to collect from you. For instance, the IRS can take a larger percentage of someone’s income than an unsecured creditor, but even the IRS leaves a certain portion of a person’s income exempt from a levy.

A wage levy is not the only way a creditor can enforce a judgment. You want to make sure you know about bank levies and liens. Here is some information about judgments and garnishments

California Wage Garnishment

You mentioned you reside in California. California, like many states, follows Federal law in terms of the maximum amount that can be garnished. Under Federal law, the lesser of the following may be garnished:

  • The amount by which a debtor’s weekly income is greater than 30 times the minimum wage. The current minimum wage is $7.25 an hour, making the 30 hour weekly total $217.50. This leaves the debtor with something to live on, though it clearly can be less than is needed to meet minimum obligations.
  • 25% of disposable income. Disposable income is defined as the income that is left after all legally required deductions are taken from a person’s paycheck. This include Federal and State Taxes, FICA, State Unemployment and Disability Taxes , with “disposable income” defined as income left after legally required deductions from a person’s paycheck, such as FICA. Other obligations, such as voluntary contributions to retirement accounts, deductions for medical, dental or vision insurance, or contribution to a Medical Savings Account are not exempt and will be considered part of the disposable income.

This formula applies to most debts. As I mentioned above, some creditors are able to garnish at a higher rate. For instance, the IRS can garnish at a more severe level, as can a garnishment for delinquent child support.

Examine the detailed Federal rules regarding garnishment, that includes a chart that lays out the legal limits of the garnishment.

In California, judgment-debtors who are about to have their wages garnished should read California form WG-003 and then complete form WG-006 to apply for an exemption. Do so immediately — a wage garnishment is much easier to prevent than unwind if you are exempt from garnishment.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com

Comments (10)


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Bryan S.
Colusa, CA  |  January 27, 2012
I have had 25% of my disposable wages garnished by the FTB for the past two years now. I am due in court and will likely lose a judgement in a few days (credit card collector brought suit against me). I'm concerned that the creditor might seek and win a wage garnishment order. Since I'm already having the 25% garnished to the FTB, do I have to worry right now that additional garnishments can be taken above that 25%? I don't have any money in the bank, but I'm afraid that the collector could come after my only possession of value, my car which is worth $7,000 to $8,000, and which I just received title to this week. I've considered putting the into an irrevocable trust, but I don't have confidence that that would be effective with so close to the court date. Do I need to worry that they could come after my car?
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Bills.com
January 29, 2012
In general wage garnishments are limited to 25% of your income. Your car could be subject to a lien and possibly sold. Before transferring title, I recommend that you speak with a lawyer. I advise you to read the Bills.com article about debt relief to explore possible strategies to deal with your debt.
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Brian M.
San Francisco, CA  |  October 26, 2011
I owe California back taxes. In 2004 I deposited $10,000 into my checking account and it was automatically taken by the state. I closed this checking account. The $10,000 did not fully satisfy the debt. In 2006 I got a job and they began taking 25% of my pay. I was laid off in 2009, with my debt still not fully paid. I have had a new checking account for a few years, but never deposited anything more than a few hundred dollars. This month I got a new job and am paid on a 1099 basis. They want to direct deposit my first paycheck into my checking account. How can I find out if the state knows about this new checking account? How can I find out if they will take my entire first paycheck after it gets deposited?
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Bills.com
October 26, 2011
Bank levies are not standing levies. When the IRS levies a bank account the funds, up to the amount owed the IRS, are frozen for 21 days, and then the funds that were in the account the day the levy hit are remitted to the tax authorities. This gives the individual some time to contest an unjust levy. Funds that arrive in the account the day after the levy hits are not frozen. I believe the time the account is frozen when the California Franchise Tax Board (CA FTB) levies your account is 10 days.

Bank levies can be issued repeatedly. So, when you are in levy status, you can never know when one will hit you. That being said, the odds of the levy hitting the exact day your direct deposit hits are slim. I suggest that you remove the funds as soon as possible, after the deposit is made. The fact that your account, even with only a few hundred dollars in it, has been free from levy, is a strong indication that they don’t know about this account. A few hundred dollars would still have been taken, if they hit your account.

A separate concern should be about the CA FTB finding out who is paying you 1099 income. Once that is in their sites, they can garnish you at even higher rate than the 25% level at which they hit your previous job’s income. This is because 1099 income has less protections than W-2 income. 1099 income is essentially viewed as receivables. If the company that pays you by 1099 receives a levy notice, all of your income could be cut off.

I strongly recommend that you contact the CA FTB and work out a payment plan that will remove the threat of levy. Be careful about divulging your source of income, as it could lead to the CA FTB contacting the people that have contracted for your work. If your remaining balance is high, you may want to hire a reputable tax professional to speak on your behalf, ensuring that you don't say something that harms yourself.
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Robert M.
Alta, CA  |  August 29, 2011
Can compensation be garnished if you are an independent contractor from the companies you contract from? Also is there a amount of earnings low enough in California that would not be garnished under any circumstance? My question concerns credit card debt bought by a outside law firm that is suing.
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Bills.com
August 31, 2011
Let me start with something I am sure of. The IRS can most definitely garnish 1099 income and the effects of an IRS wage garnishment can be worse for a 1099 recipient than for a W-2 earner. IRS wage levies have to leave a minimum amount of income, based on the 668-W levy table. 1099 recipients income can be viewed as 'receivables' and anything due the recipient can be cut off by a notice of levy sent to the contractor's payor.

I believe it would be harder for a judgment-creditor to get your 1099 income, but it certainly may be possible. You should consult with an attorney, to accurately determine your exposure.
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Trace E.
Santa Ynez, CA  |  June 10, 2011
Hello, I am a retired Los Angeles Fire Fighter. I recently had a levy placed on my checking account and $4,200 was instantly removed from my account by a credit card collection firm. I was told that fire fighter disability retirement benefits were exempt from any levies, liens or garnishments. According to the bank, a fire fighters disability retirement is not an "automatic exemption" and I would need to file a "claim of exemption" to try and stop it. Again, it was my understanding that police and firefighter disability retirement were automatically exempt. Is this true? Any advise would be greatly appreciated.
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Bills.com
June 10, 2011
Social Security and retirement benefits are exempt from garnishment, generally speaking. In other words, these funds may not be intercepted while in transit to you, generally speaking.

However, you mentioned the funds were removed from your bank or credit union account, an action commonly called an account levy. In law, levy is different from a wage garnishment, although from the consumer's perspective this is a distinction without much of a difference.

First, ask your bank or credit union to add a notation to this account stating that it contains only funds received from Social Security and pensions, and may not be levied or garnished. Second, consult with a lawyer about filing an exemption so that the funds in question are returned to you.
Lastly, you should request that your Social Security funds are directly deposited into your account. There is a new rule, that is yet to be finalized, that exempts two months of your benefit award from a bank levy.
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CAROLE T.
Fairfield, CA  |  June 07, 2011
I have a different issue with wage garnishment in CA. I have a court ordered garnishment on an employee who has both an IRS tax garnishment and a State of CA tax garnishment in front of me. The 2 added together do not equal 25% of her wages. Can I be a third garnishment for the amount remaining until it equals 25%?
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Bills.com
June 07, 2011
If the judgment debtor earns more than the statutory minimum, for garnishment, and is being garnished at (to make up a number) 20%, then a subsequent judgment-creditor may garnish the remaining 5%. Therefore, the answer to your question is a qualified yes.
Thanks for your feedback!
 
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