Blueprint of a Garnishment in California

There are several ways that a creditor may pursue collection against an individual or a corporation when the debt is not being paid. Garnishment is a common collection method. Garnishment means that a person’s wages are being taken directly to pay the debt.

What is a garnishment?

A garnishment is when your employer withholds a portion of your earnings for the benefit of one of your creditors. The money is normally sent first to the sheriff’s office and then is sent to your creditor. CCP § 706.025. Most creditors are first required to obtain a judgment before being able to garnish your wages. Some creditors like the IRS can garnish your wages without an order from the court.

How a Writ to Garnish is obtained?

The garnishment writ is issued from the Superior Court. The person owing the debt is usually sued in the county where they reside. The lawsuit usually includes causes of action for breach of contract and common counts. As with any lawsuit, the plaintiff/ creditor must obtain a judgment from the Superior Court. If you are sued, it is the best practice to defend yourself and not let a default to be entered. This enables you to gain additional time to either settle the debt, or look for greater options for yourself.

How does a garnishment work?

In the state of California, your employer must give you a notice 10 days before your earnings are withheld from your paycheck. CCP § 706.125. The withholding period generally commences 10 calendar days from the date the earnings withholding order is served upon the employer. CCP § 706.002.

The garnishment of earnings is not to exceed the lesser of 25% of disposable earnings, or the equivalent of the amount by which the disposable earnings for a week exceed 40 times the state minimum hourly wage. CCP § 706.050.

Here is an example of how the garnishment cap works:

Example One: An individual’s disposable earnings for the week are $500, and the state minimum wage is $8 an hour.

25% of earnings Amount that exceeds minimum wage times 40
(8 * 40 = 320)
The maximum withholding
$125 $180 $125

Example Two: An individual’s disposable earnings for the week are $400, and the state minimum wage is $8 an hour.

25% of earnings Amount that exceeds minimum wage times 40
(8 * 40 = 320)
The maximum withholding
$100 $80 $80

In example one the maximum withholding is calculated using 25% of disposable earnings, and in example two the maximum withholding is calculated using the amount that exceeds the minimum wage times 40.

In general, the first garnishment order that an employer receives is the one that will be paid on, however, there are certain debts that take precedence over other debts. These special debts include spousal support, child support, taxes, and elder abuse judgments. CCP § 706.023.

Federal law allows certain creditors to garnish up to 65% of an individual’s disposable earnings for a week. 15 USC 1673. The earnings can be garnished 50% for spousal or child support if the individual being garnished is supporting a spouse or a dependent child. That amount goes up to 60% of disposable earnings when the individual is not supporting a spouse or dependent child. If the individual is more than 12 weeks delinquent on the spousal or child support the limits go to 55% and 65% respectively. 15 USC 1673.

What is safe from garnishment?

Certain funds are exempt from garnishment, such as social security benefits (42 USC 407) and veteran’s disability benefits (38 USC 5301). (Although in some cases these funds may be subject to garnishment for spousal or child support). The protection of social security benefits continues once the funds are paid to the individual as long as the funds remain identifiable as social security benefits.

Also, an individual can apply to the court to exempt their wages from levy under certain circumstances. This is called a claim of exemption, and in order to have the wages deemed exempt the individual must show that the earnings are necessary to support the judgment debtor or their family. CCP 706.051.

Bankruptcy Protects Wages

Individuals that file bankruptcy are able to stop the forward momentum of garnishing creditors. The moment a bankruptcy case is filed, the automatic stay provisions of the bankruptcy code go into play, acting as a shield that stops any further state court collections.

Sometimes, garnished funds can be recovered under bankruptcy code provisions for preferential payments or as ongoing lien on wages that the bankruptcy court can strip off. These proceedings require proactive steps to be taken by the bankruptcy litigant in obtaining an order of the court that requires the garnished funds be returned.