In recent weeks, several additional blog readers have posed questions about garnishment of wages, so I’ll review some of the information in today’s blog post.
First, I’ll remind you, a writ of garnishment, as The Bankruptcy Handbook explains is the legal name for a court order directing an employer to deduct money from an employee’s paycheck. The order informs the employer how much money to garnish and where to send the funds.
Wage garnishment laws differ from state to state. Under Indiana law, a creditor can garnish no more than 25% of disposable income. The one exception is child support, for which Indiana law allows garnishment of up to 50% of income. Since readers have asked about situations in which they are living in one state, but being paid by a corporation in another state, the rules about garnishment of income would need to be settled in court.
One blog reader’s situation was a little different in that he’s an independent contractor. Rather than having a regular paycheck, he gets paid a certain amount of money each week while the job is going on. His question to me was whether independent contractor wages can be garnished by a creditor. A 2007 case tried in the Court of Appeals in Indiana reveals the answer. “Garnshment refers to any legal or equitable proceedings through which the earnings of an individual are required to be withheld by a garnishee, by the individual debtor, or by any other person for the payment of a judgment.”
Even as I’m sharing this information with readers, it’s important for me to include the reminder that every client story is different. Knowing which laws apply in any given situation requires specialized legal training and experience.