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 more detailed information about wage 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 in the Dept. of Labor's The Federal Wage Garnishment Law, Consumer Credit Protection Act's Title 3 (PDF), which includes a chart that lays out the legal limits of the garnishment. See also the Public Counsel document Wage Garnishment: A Guide to Understanding Court-Ordered Wage Garnishment and Your Options (PDF) to learn about California's garnishment rules.
In California, judgment-debtors who are about to have their wages garnished should read California form WG-003 (PDF) and then complete form WG-006 (PDF) 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
Dublin, OH | February 23, 2012
February 27, 2012
- Issue you a 1099-C, and abandon any collection efforts
- Issue you a 1099-C, and sell your collection account to a collection agent for pennies on the dollar
- Issue a 1099-C or not, and file a lawsuit against you in Ohio. It could then domesticate the Ohio judgment in California.
- Issue a 1099-C or not, and file a lawsuit against you in California
If the creditor pursues legal action against you as a California resident, or chooses to domesticate an Ohio judgment in California, California wage garnishment rules apply. We outline California's rules in the original answer above.
Colusa, CA | January 27, 2012
January 29, 2012
San Francisco, CA | October 26, 2011
October 26, 2011
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.
Alta, CA | August 29, 2011
August 31, 2011
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.
Santa Ynez, CA | June 10, 2011
June 10, 2011
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.
Fairfield, CA | June 07, 2011
June 07, 2011
Perris, CA | July 07, 2012
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