How Wage Garnishment Laws Affect Many Texans
Although wealthier Texans may build up significant savings and retirement accounts by middle age, most residents must keep working far longer to meet their individual and family needs. And if unexpected family or medical crises occur creating new financial emergencies, some people may face wage garnishments. Fortunately, Texas offers strong protection against many types of creditors.
Here’s a brief review of the most common types of wage garnishments pursued in Texas, basic terms you’ll need to know regarding this field – and references to special concerns you may need to discuss with your Houston business law attorney to fully protect your rights.
Important terminology related to attaching employee wages
Wage garnishments. In Texas, this term is often used interchangeably with “wage attachments” and refers to court orders directing employers to withhold certain amounts of money from employee paychecks to satisfy certain debts;
Administrative garnishments. These usually refer to federal government back taxes or student loans now in default – and they do not require a court order to be activated. Once debtors have student loans in default, they’ll normally be contacted by the U. S. Department of Education and told which collection agencies will be collecting their debts. (Note: Students loans can almost never be discharged by a bankruptcy filing);
Disposable earnings. This refers to the amount of money you have left in your paycheck after all mandatory deductions have been made for federal taxes, disability insurance, union dues, unemployment insurance, nondiscretionary retirement deductions, workers compensation and health insurance.
Types of debts often leading to wage garnishment
Texans are very fortunate compared to citizens of other states since Texas only honors a very limited number of garnishable debts.
Unpaid child support and alimony (in arrears)
Current court-ordered child support and alimony
Government debts owed to the IRS (back taxes) -- and all related fines and penalties
Unpaid student loans (in arrears)
Note: In light of Article IV of the U. S. Constitution, Section I (requiring each state to honor the “public acts . . . and judicial proceedings of every other state,” certain other limited creditor debts referenced in judgments obtained outside of Texas may also be garnishable.
Be sure to speak with your Houston business law attorney whenever you receive any notice of an order to garnish your wages.
Fixed garnishment limitations that benefit Texas debtors
Total amount that can be garnished (based on all court orders). This is equal to 50% of your disposable earnings;
Percentage allowed for tax debt. This varies, based on your current deduction rate, the number of your dependents and other factors;
Student loans. The Department of Education can normally only garnish up to 15% of your disposable income from each paycheck;
Spousal support. The most your wages can be attached for this obligation is either $5,000 or 20% of your average monthly gross income – whichever is less.
Priority of wage garnishment orders
Although unusual factors might be able to change the list below, employers must normally prioritize their payment of garnishment orders in the following manner.
Texas employers are not allowed to discriminate against employees with wage garnishments
This has long been a concern of many employees since handling wage garnishments can take up a considerable amount of an employer’s time. Texas doesn’t allow those with wage attachments to be treated unfairly when it comes to hiring, promoting, demoting, reprimanding and firing (among other actions).
How creditors can still reach your money – apart from using wage garnishment
Even if your wages cannot be reached, regular creditors can still gain access to your money by obtaining court orders to freeze one or more of your financial accounts – and place liens on certain types of real property you own.
Please contact our law firm with any questions you may have about the proper handling of court orders to garnish wages -- or any other types of administrate tasks regarding employees.