When creditors or government entities have exhausted all other options to collect a debt, they may resort to wage garnishment. It’s a court order that requires an employer to withhold a specific amount of an employee’s earnings and send it directly to a creditor or person until the debt is repaid.

Credit card debt, child support, tax liens and student loans are the most common reasons for wage garnishment. Although having your wages garnished can be a shock, it’s important to know there are caps on how much of each check can be withheld. Let’s learn more details about wage garnishment.

Who Can Garnish Wages?

Credit card companies, other loan providers, government entities such as the IRS and Department of Education, as well as courts ordering child support or alimony payments can initiate wage garnishments. Certain creditors must go through a legal process and be awarded a judgment before they can garnish wages, while others, including the U.S. government, don’t have to go through the trial process.

How Much of Each Check Can Be Garnished?

The amount of the garnishment depends on the type of creditor, the debt amount and federal and state regulations. Caps vary widely depending on the laws in each state. In some cases, the total amount due will include court costs.

You will receive a notice of garnishment that outlines the details of the original debt and how much of your paycheck will be taken out each pay period. Review this notice carefully to be sure the debt isn’t something you already paid off or made other arrangements to address.

Can I Fight a Garnishment?

If you feel like a garnishment has been wrongly decided, you can challenge the judgment in court. It’s best to consult an attorney or community legal aid to assist you in challenging a garnishment.

If the garnishment will cause extreme financial hardship, talk with a nonprofit credit counselor to explore your options. You may benefit from a debt management plan or find that bankruptcy is an option to eliminate the debt — and therefore the garnishment — and start fresh.

Does a Garnishment Affect Credit?

As of 2017, Experian, Equifax and TransUnion no longer list a notice of wage garnishment on consumers’ credit reports. However, a garnishment can still harm your credit. If you’ve reached the point where a creditor needs to garnish wages to recover a debt, there’s likely a long history of missed payments and collection efforts already on your credit report. This will negatively impact your credit score and make it harder to obtain new credit at reasonable interest rates. These negative entries remain on your credit report for seven years but have less impact over time.