Understanding Garnishment: What It Means for Your Money

Written by: David (he/him)

2 min read | Published: June 17, 2025

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Managing debt is a critical part of personal finance, but sometimes debts become overdue, triggering specific actions from creditors. One such action is garnishment; a financial tool creditors may use to reclaim unpaid debts. Knowing how garnishment works can empower you to better handle your financial obligations and protect your financial stability.

What Is Garnishment?

Garnishment allows creditors or debt collectors to legally collect unpaid debts directly from your income or financial accounts. Common debts leading to garnishment include unpaid student loans, taxes, child support, and court judgments. There are several ways garnishment can occur:

Wage Garnishment: Money is deducted directly from your paycheck.
Bank Account Levy: Funds are taken directly from your credit union, bank, or online financial account.
Tax Refund Offset: Your tax refund is redirected to pay your debt.

How Does Garnishment Work?

Typically, creditors must first obtain a court judgment against you. Afterward, they can request an order to garnish your wages or bank account. However, certain debts (such as federal taxes, student loans, and child support) do not always require a court judgment, allowing for garnishment without court intervention.

Federal law limits wage garnishment to ensure you retain enough income to meet basic living expenses. Usually, up to 25% of your disposable income (earnings after taxes and mandatory deductions) can be garnished, although lower limits apply to specific debts like student loans or child support.

What Can You Do If You Face Garnishment?

Communicate With Creditors: Often, creditors are willing to negotiate repayment plans or settlements, potentially avoiding garnishment.
Request a Hearing: You may have the right to challenge a garnishment through a court hearing.
Seek Professional Advice: Financial counselors or legal professionals can provide guidance tailored to your circumstances.

How to Prevent Garnishment

Stay Proactive: Regularly monitor your debts and communicate with creditors.
Budget and Manage Debt Responsibly: Keeping up to date with payments and managing your financial obligations carefully can significantly reduce the risk of garnishment.
Explore Financial Assistance: In some cases, credit counseling or debt-relief services can help you manage your debts and avoid garnishment.

Garnishment is a legal process creditors use to recover unpaid debts directly from your income or financial accounts. Understanding garnishment, recognizing early signs, and knowing how to respond can help you protect your financial stability.