If you’ve been threatened that your wages will be garnished don’t panic. It isn’t as easy as you might think for a creditor to withhold your earnings. In most cases, creditors would first have to file a money judgement against you before further action could be taken. Specifically, this would involve a creditor suing you in court (and winning the case) or receiving a default judgement. Under certain exemptions, creditors are prohibited from taking a specific amount from your wages. Furthermore, there are certain types of income that forbid wage garnishment altogether. The following types of income cannot usually be garnished by your everyday creditor:
- Social security
- Child support
However, there are exceptions to these, such as garnishments for federal taxes and student loan payments that are past due. All states have different exemptions and it is important to know which exemptions apply to each case. Examples of properties that are exempt include: equity in a home or car, food, and basic living necessities. In some cases, other laws are in place to protect your assets. One such example is the anti-alienation clause in regards to ERISA retirement accounts.