A wage garnishment or income withholding happens when a creditor takes money from your paycheck as compensation for an unpaid debt. Having to go through such a situation can be unbelievably stressful. You wake up every morning, go into work, and make your money so at the end of the day, you can support your family and have dinner on the table. But when you start seeing money being taken out every month, that can put a lot of stress on your shoulders.
A good thing about wage garnishment, however, is that a credit or debt collector cannot do this unless they have filed a lawsuit against you and then win the lawsuit. Also, there are limits set up in each state to prevent them from over-extending their reach into your wallet and taking more money than what is allowed. Particularly in the state of Minnesota, the most that can be garnished from your wage is either 25% of your disposable earnings, or the amount by which your weekly disposable earnings exceed 40 times the federal hourly minimum wage (currently set at $7.25/hour). Of the two options, whichever amount ends up being the lesser of the two is what will be garnished.
For example, let’s say you take home $600 per week, after taxes are deducted (this is what is known as your disposable earnings). 25% of this is $150, and 40 times the federal minimum wage is $290. Since $150 is lesser of the two, that is the amount that can be sent to your creditor to start repaying your debt.
However, keep in mind to some of these rules regarding this wage garnishment. If you owe child support, student loans, or taxes, the government is allowed to garnish your wages without getting a court order. Also, if you have more than one garnishment, the total amount that can be taken is still limited to 25% or 40 times the federal minimum wage. An example of this would be if the government is garnishing 20% of your income to pay off a student loan, and your employer receives another wage garnishment order, they are allowed to only take another 5% of your income to start paying off this other debt.
Minnesota law also prevents employers from firing an employee just because of a garnishment. However, if you have more than one under your name, then the federal law cannot do much after this point. Individuals sometimes decide to quit their job or file for bankruptcy to avoid this situation altogether. Either way, it’s important to do your research and be up-to-date on your facts so you know what to do in any given situation.
Every summer, Archana works at Kumon, a math and reading workshop, tutoring children between the ages of three and 18 in these subjects. She used to be enrolled in this program herself, so this allows her to connect with the students and give them the one-on-one help that they need. Archana is also currently a member of NC State’s Psychology Club, Rotaract Club, and EKTAA (NC State’s premiere South Asian Student Organization).
Archana was born in India, and moved to North Carolina with her immediate family when she was 7 years old. She speaks mostly Tamil, the native language of South India, and English in her home. In addition, having taken Spanish classes since 6th grade, she can speak and understand it pretty well too. Archana enjoys spending time with her family and friends, watching movies, listening to music, and going to the gym. She also loves to travel, and hopes to travel the world one day and learn about all the different cultures!
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