Most states limit the amount that a creditor can garnish from your paycheck for delinquent debts. Texas laws that limit the amount that a creditor can take from your wages to pay your debts are much stricter than the federal laws regarding wage garnishment also known as wage attachments. Based on Texas law, a creditor cannot garnish your wages for anything other than student loans, alimony, child support, or taxes. The laws are very specific, and even set specific limits regarding how much of your wages can be garnished to pay your past due debts.
What is a Wage Attachment or Garnishment?
A wage attachment is a court order that is sent from a creditor to your place of employment. It orders your employer to withhold a specific amount of your paycheck then forward those funds on to your creditor. There are different rules regarding garnishment that apply to different debts. These laws limit the amount that a creditor can garnish from your check. Your employer will be sent documentation that indicates what kind of debt is being garnished and how much of your disposable earnings can be garnished based on Texas state laws. Your employer’s payroll department is required to abide by the wage order and take out the specified amount and then forward it to the proper entity as payment toward your debt.
When Can Wages Be Garnished in Texas?
There are limits put on how much can be taken out of your paycheck. Federal laws establish these limits. They set these limits, so debtors can have enough pay left after garnishment in order to cover basic living expenses. Most creditors aren’t allowed to garnish wages in Texas, but there are a few exceptions. Those exceptions allow garnishment of wages for unpaid income taxes, defaulted student loans, and court-ordered child support and alimony. How those different kinds of debts can be garnished are specified in the laws, and there are limits on how much can be withheld from each paycheck.
While garnishment isn’t allowed for other kinds of debts in Texas, creditors might be able to act against you in other ways for past due bills. For example, a creditor might be able to seize or levy your assets, such as the money that you have in your bank accounts. If you work for a company that is not in Texas, or if your wages come from a source that isn’t located in the state, a creditor might get the judgment domesticated so they can go ahead and garnish some of your wages since your income isn’t earned in the state.
What Are the Permitted Garnishment Amounts?
If you owe back taxes, student loans or child support, the creditor or the government entity can garnish wages without getting a judgment from the court. The maximum amount that these creditors can garnish is different. Here is a rundown of how much of your wages can be garnished to cover the garnishments that are permitted within the state.
Any court-ordered child support since 1988 includes an automatic order for withholding income. If you are past due on your child support, the other parent can get a wage garnishment. Up to half of your disposable earnings can be withheld to pay toward domestic obligations, such as alimony or child support. Texas considers disposable earnings to be wages left after your employer makes any required deductions, such as taxes, as well as insurance for you and your family, non-discretionary retirement deductions, and union dues. For example, if your paycheck is $800 after deductions, then as much as $400 can be taken out of it to cover the cost of your past due child support and/or alimony.
Those who default on a federally backed student loan can have their wages garnished without a court order. This is an administrative garnishment done by the Department of Education or entity collecting on their behalf. No more than 15% of your disposable income, or no more than 30 times the current minimum wage can be withheld.
If back taxes are owed, the federal government can garnish your wages without a judgment from the court. The amount of the garnishment is dependent on your deduction rate and the number of dependents. Local and state governments can also garnish your wages for unpaid taxes.
Can You Be Fired Because Your Wages Are Garnished?
Your employer might find complying with orders for your wage garnishment to be a hassle. Because of the extra trouble, some employers might think firing you is easier than dealing with the extra paperwork, but you have some protection in this situation thanks to state and federal laws. Federal laws prohibit your employer from firing you because you have a wage garnishment. Texas law strengthens that by saying an employer can’t discipline, fire you, or refuse to hire you because you have a wage garnishment. If an employer does act against you because of your wage garnishment, you might have grounds to take separate legal action.
How Bankruptcy Affects Wage Garnishment
Filing for bankruptcy protection can keep you from having your wages garnished. Filing Chapter 13 bankruptcy can also help you with your tax debt. You can wipe out or eliminate old income tax debt through Chapter 13. Delinquent taxes must meet specific requirements to qualify for discharge during the bankruptcy case. Any nonpriority secured creditors will share your discretionary income after allowed living expenses and payments are made. Also, there are exemptions in Texas bankruptcy, which will help avoid having assets be subjected to seizures or levies, depending on the debts and the situations.
A Texas bankruptcy attorney can go over the bankruptcy process and explain how a bankruptcy filing will affect your back taxes, wage garnishments, and your property ownership. You should learn the details about a Texas bankruptcy filing to determine if bankruptcy is the best option for your specific financial situation. You need to review the details and weigh your options, so you can make the best decision for your needs.
Filing for bankruptcy is never an easy decision, and what’s more, it isn’t always an easy process. It’s easy to make a mistake in the complicated paperwork or during filing, and an unintended error could be grounds for having your case dismissed. In those instances, you end up with no debt relief, but still get your credit scores badly damaged by the bankruptcy filing.
This is why it is crucial that you work with an experienced debt collection and bankruptcy attorney like those at Fears Nachawati. There are important points to consider regarding eligibility, residency requirements, property requirements or exemptions, timelines to consider, and a number of other legal hoops to jump through. If you are considering filing for bankruptcy, it’s important to get help from an experienced Texas bankruptcy lawyer.
Please call (866) 705-7584 or visit the offices of Fears Nachawati located throughout Texas, including in Houston, Dallas, Austin, Fort Worth, and San Antonio.