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Garnishment: What you need to know

A wage garnishment is an order from a judicial or governmental agency requiring an employer to withhold a certain sum from the wages of an employee for payment of a debt. Such an order may come from the Internal Revenue Service (IRS), a federal or state agency or court, or from an individual creditor. An employer's response to a garnishment demand will depend upon its nature, and in what order the employer receives it. The law applies in all 50 states, Puerto Rico, the District of Columbia, and all U.S. territories and possessions.
Wage garnishments do not include voluntary wage assignments--situations in which employees voluntarily agree that their employers may turn over a specified amount of their earnings to a creditor or creditors. Also, wage garnishments do not apply to certain bankruptcy court orders or to debts due for federal or state taxes.
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Wage garnishment is very complex. Federal law is not straightforward, and state laws also interact with garnishment obligations. An employer that receives a wage garnishment order may want to consult a legal advisor before deciding how much to withhold and, in the case of multiple garnishments, where priorities lie.
Never ignore a garnishment order. Failure to answer and comply may result in a contempt of court judgment, and in some cases the employer may wind up with liability for the amount owed. In the case of a consumer order, if an employer is unable to honor it because of its priority or the exemption amount, the employer must communicate with the court or agency and explain the circumstances.
Employers should take care not to be misled by official-looking documents mailed by collection agencies requesting deductions from an employee's paycheck.
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