Summary Definition: A legal arrangement where part of an employee’s gross pay is deducted and sent to a creditor to pay off that employee’s debt.
Wage garnishment is a legal arrangement where an employee’s debts are paid off via mandatory payroll deductions from their wages being sent directly to their creditor. They’re usually the result of a court order or governmental notice that requires the employer to withhold and send payments on their employee’s behalf.
Wage garnishments can apply to several types of debts, including child support, unpaid taxes, and student loans. There are, however, limitations on the amount of wages that can be garnished, as described by Title III of the Consumer Credit Protection Act (CCPA).
Learn More: What is Wage Garnishment? And How Does it Work?
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