Wage garnishment regulations in North Carolina allow for wage attachments in extremely restricted instances. Find out more.
A “wage garnishment,” also known as a “wage attachment,” is an order that requires your employer to deduct a particular amount of money from your salary and deliver it straight to one of your creditors. Most creditors cannot garnish your salary unless they first get a money judgment from a court. For example, if you fall behind on credit card payments or owe a doctor’s bill, your income cannot be garnished until you litigate and get a judgment. Some creditors, such as those owed taxes, federal student loans, child support, or alimony, do not need to file a lawsuit in order to garnish your wages. These creditors have the legal ability to deduct money immediately from your paycheck.
However, creditors cannot grab your whole salary. The amount of your income that may be garnished is determined by many laws and legal constraints. For example, federal law restricts the amount of judgment creditors may collect. The garnishment amount is restricted to 25% of your disposable weekly earnings (what’s left after obligatory deductions) or the amount by which your disposable weekly earnings exceed 30 times the federal minimum hourly rate, whichever is smaller. (15 U.S.C. § 1673).
Some states have a lower % restriction on how much of your salary may be garnished. North Carolina is one of just a few states that limits the sorts of debts that may be collected by deducting money immediately from a paycheck. In certain North Carolina counties, wage garnishments may be used to collect taxes, student loans, child support, alimony, and ambulance services. Money judgment debts such as vehicle payments, mortgages, and credit card debt are not permitted unless the creditor obtained the money judgment in another state.
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Wage Garnishment Limits in North Carolina
North Carolina is unusual in that a creditor with a money judgment cannot garnish wages. However, federal garnishment restrictions apply if the creditor obtained an out-of-state garnishment; the creditor may garnish 25% of your disposable income or the amount by which your disposable income exceeds 30 times the federal minimum wage, whichever is less. However, the creditor may utilize other methods to recover a debt, such as withdrawing funds from a bank account.
In addition, North Carolina enables a creditor to use wage garnishment to collect the following debts:
income taxes owed
In certain counties, alimony, court-ordered child support, and arrears are allowed, as are unpaid school debts, unemployment assistance overpayments, and ambulance expenses.
Child Support, Student Loan, and Unpaid Taxes Limits
If you owe child support, federal student loans, or taxes, the government or a creditor may garnish your earnings without a court order.
Limits on Garnishment for Unpaid Child Support
Since 1988, all child support orders have included an automatic income withholding order. If you fall behind on child support payments, the other parent may seek a wage garnishment order from the court.
This form of wage garnishment is prohibited under federal law. If you are presently supporting a spouse or kid who is not the subject of the order, up to 50% of your disposable wages may be taken to pay child support. If you do not support a spouse or kid, the government may confiscate up to 60% of your wages. If you are more than 12 weeks behind on your payments, you may be charged an extra 5%. (15 U.S.C. § 1673).
Maximum Garnishment for Federal Student Loans in Default
If you are in default on a federal student loan, the United States Department of Education or any firm collecting for this agency has the authority to garnish up to 15% of your wages. (20 U.S.C. § 1095a(a)(1)). This is referred to as a “administrative garnishment.” However, you may retain an amount equal to 30 times the current federal minimum wage every week. (Recall that federal law protects income up to 30 times the minimum wage per week from garnishment.) (15 U.S.C. § 1673).
Limits on Garnishment for Unpaid Taxes
If you owe unpaid taxes, the federal government may garnish your earnings (called a “levy”) even if you do not have a court judgment. The weekly exempt amount is calculated by adding the taxpayer’s standard deduction and the aggregate amount of personal exemption deductions permitted in the taxable year in which the levy occurs. The sum is then divided by 52. If you fail to verify the standard deduction and the number of dependents you are allowed to claim on your tax return, the IRS bases the amount exempt from levy on the standard deduction for a married individual filing separately with just one personal exemption (26 U.S.C. 6334(d)).
States and municipalities may also be entitled to garnish your salary in order to collect outstanding state and local taxes. North Carolina Department of Revenue garnishments are restricted to 10% of your gross earnings. (North Carolina General Statutes 105-242). More information is available on the North Carolina Department of Revenue website.
How to Keep Your Wages Safe From Garnishment
A creditor may garnish your earnings until the debt is paid off or you take action to halt the garnishment, such as filing an exemption with the court. So, if you get a notification of a wage garnishment order, you may be able to safeguard or “exempt” any or all of your income by submitting an exemption claim or making an objection with the court. The processes you must take to object to a wage garnishment vary depending on the kind of debt sought by the creditor and the laws of your state.
Most garnishments may also be stopped by filing for bankruptcy. The quantity of money you may keep is determined by your state’s exemption regulations. (If you can’t pay your payments, find out whether debts are dischargeable in Chapter 7 bankruptcy.)
Job Termination Restrictions Due to Wage Garnishments
Complying with wage garnishment orders might be difficult for your employer; some may choose to fire you rather than comply. In this circumstance, federal law gives you some protection. If you have one wage garnishment, your employer cannot fire you under federal law. (15 U.S.C. § 1674). However, if you have more than one wage garnishment order, federal law will not protect you.
Some states provide greater debtor protection than others. North Carolina follows federal law, which states that if you have a wage garnishment, your employer cannot fire you.