Attachment of earnings is legal process by which a creditor takes a percentage of a defendant’s wages or earnings to satisfy a debt. It is a civil action used in common law countries, primarily in the UK and the US. In the US, the process is also sometimes called “wage garnishment” or “garnishment of wages.”
The process of attachment of earnings begins when the creditor serves the defendant with a notice of impending attachment. If she does not respond to the attachment notice or is unable to reach a satisfactory repayment arrangement with the creditor, the creditor can seek an attachment order from the court. If the court enters an order for attachment of earnings, it is sent to the defendant’s employer. The order directs the employer to withhold a certain percentage of the defendant’s earnings.
The percentage of earnings that can be withheld will vary from state to state in the US. A handful of states in the US do not allow attachment of wages. Under federal law, attachment of earnings is limited to twenty-five percent of the defendant’s disposable earnings, commonly called “net pay.” In some states, the amount is fixed at ten percent of disposable income.
Some types of income are exempt from attachment of earnings. These include child support payments, workers compensation, unemployment compensation, and veteran’s benefits. Social Security payments and disability income are also exempt. These types of income are protected under federal law.
In many jurisdictions, a defendant can apply to a court to designate the clerk of the court as a trustee. The trustee then distributes the payments to the creditors. Once a person does this, no creditor can attach her earnings. Consulting with a consumer credit counseling agency and entering an agreement to pay certain amounts to each creditor can prevent attachment of a person’s earnings. When creditors start receiving payments under the agreement, they cannot attach the earnings of the person who signed the agreement.
A person cannot be fired from their job because an attachment order is sent to her employer. However, more than one attachment of earnings order in twelve months can in some jurisdictions result in loss of employment. In the US, filing for bankruptcy in US federal court will exempt a person’s earnings from attachment or garnishment.
Another way of taking a person’s income to satisfy debts is through “interception.” In interception, the Internal Revenue Service (IRS) withholds any amount of tax refund due the debtor and then pays it satisfy a federal, state, or court-ordered obligation. This generally is done for unpaid federal taxes, child support, and sometimes student loans guaranteed by the US Department of Education. The IRS will also intercept federal tax refunds to satisfy unpaid state taxes if a state requests it. Interceptions are carried out automatically under federal law and no legal proceeding by the IRS is necessary.