Garnishment

Written by Fmi.Online Friday January 6, 2023
A garnishment is a legal requirement to allocate money, usually placed on wages, or property to a deserving third party based on a court order or legal action that has been taken by the third party. Garnishments are typically applied to earnings paid by an employer, in which the garnishment is directly withdrawn from the employee's earnings, and remitted to the third party as designated by the court order.

Explanation :

 

There are a number of reasons why a court order from a judge may require an individual’s wages or property to be garnished. Most often, wage garnishments are required when an individual fails to repay a creditor, and the creditor is required to take legal action to force the individual to repay the debt. Why are garnishments deducted from an employee’s wages? Assuming the legal action taken by the creditor results in a court order for a wage garnishment to be applied, the employer of the individual will be notified and the employer will directly withdraw the required amount from the employee’s paycheck. Upon withdraw; the employer will remit the garnished wages directly to the creditor who obtained the court order.

In a nutshell :

  • A garnishment is an order directing a third party to seize assets, usually wages from employment or money in a bank account, to settle an unpaid debt.
  • The IRS may garnish wages without a court order.
  • The Consumer Credit Protection Act sets the limits for what can be garnished from wages, except for unpaid taxes, delinquent child support, bankruptcy orders, defaulted student loans, and voluntary wage assignments.
  • The debtor may be entitled to relief if facing financial hardship.
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