Wage Execution
What is a Wage Execution?
Also called garnishment, a wage execution is a process under which money owed or paid to a borrower is given to a creditor instead.
How Does a Wage Execution Work?
Let's say John Doe has stopped paying child support to his ex-wife. His ex-wife takes him to court for the money owed and obtains a garnishment, whereby the court seizes a portion of John's monthly paycheck and automatically gives it to his ex-wife.
Wage execution is often used to recoup back taxes, delinquent child support or judgments, and the courts have the ability to garnish not just wages, but bonuses, commissions, pension income, and distributions from retirement plans. Welfare, unemployment, veterans benefits, social security income, workers compensation and child support payments generally cannot be garnished.
The Consumer Credit Protection Act prohibits employers from firing employees because their earnings are being garnished, though there are some exceptions.
Why Does a Wage Execution Matter?
Wage executions generally require a court order, and they can destroy a person's credit rating. It is important to note that not all things can be garnished; state laws set forth the exemptions. Usually, state laws prohibit garnishing a person's assets to the extent that they leave the borrower with no way to support himself or herself.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
Read This Next
