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
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.
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.