Introduction to New Jersey Wage Execution Law

After suing a debtor and winning a monetary judgment against the debtor on a consumer debt, a New Jersey creditor has several means of ensuring that money is actually obtained from the debtor to pay the judgment amount. One of those means involves garnishing the debtor’s wages through a Wage Execution Order. What happens with this is, a court orders the debtor’s employer to withhold a portion of his or her wages and pay it directly to the creditor

How Much Can Be Garnished?

The good news for debtors is that New Jersey’s wage garnishment limits are stricter than federal law. Creditors can garnish only the lesser of the limits imposed by federal law and New Jersey law.

The limits are generally calculated using “disposable earnings.” Disposable earnings are an employee’s gross wages, less deductions legally required for things like tax withholdings, payroll taxes, and state employee retirement contributions.

Under federal law, the creditor can garnish the lesser of:

  •  25% of a debtor’s disposable earnings, or
  • disposable earnings less 30 times the federal minimum wage (currently $7.25), whichever is less.

Under New Jersey law, garnishment limits depend on whether the debtor earns more or less than 250% of the federal poverty level for his or her family size. Thus …

  •  If the debtor earns less than 250% of the federal poverty level, no more than ten percent of his or her gross earnings may be garnished by the creditor.
  • If the debtor earns more than 250% of the federal poverty level, up to 25% of the debtor’s disposable earnings may be subject to garnishment.

What If There Are Multiple Judgments Against a Debtor?

If there are multiple debts or judgments, creditors must stand in line to receive garnished wages, first according to the type of debt, and then according when the judgment was obtained. Child support, tax debt, and federal student loan obligations always come first. After these obligations are satisfied, garnished wages can be paid to consumer creditors.

Need Help?

If you have questions about wage garnishment or need help with any debt-related issue, do what so many in Northern and Central New Jersey do: Contact Mitchell Law Offices.