A garnishment is a legal remedy used to collect an outstanding debt that has not been paid. When a debt is owed and all other avenues of collection has been exhausted, if a creditor (the plaintiff) takes a debtor (defendant) to court and wins the judgement, he is then given the right to collect the money due from a third party, such as an employer or a bank account.
A garnishment gives notice to the third party, the employer or bank, to withhold money or other assets, in part or in whole, from the defendant and requires the third party to pay the creditor from the debtor's wages or bank accounts.
In simple terms, if you have an outstanding debt, the creditor can take you to court and have your your wages or your bank accounts garnished for the payment of the debt.
A plaintiff can seek remedy for nonpayment of credit card bills, rent or lease payments, child support, alimony, unpaid taxes, student loans, and other outstanding debt.
The Internal Revenue Service (IRS), state, and other local taxing agencies can levy garnishments for unpaid taxes. So can other governmental agencies for non tax related debt.
There are certain rules and stipulations that require employers to handle garnishments as part of the payroll process in which the distribution of an employee's wages is structured on a basis of who is to get paid first, which is usually the IRS, if federal taxes are owed, the state, credit card companies, and so on.
Title III of the Consumer Credit Protection Act, a federal law, sets standards for the protection of employees who's employers have been notified of a garnishment of wages, prohibiting the firing of the employee, even if the employee's wages have been garnished more than once.
Title III protects employees who are earning wages, salaries, commissions. It also protects anyone who is receiving earnings from retirement accounts or other pension plans.
Although Title III is a federal act, garnishments are also regulated by the laws of the state in which they are authorized. Garnishments are not allowed in all states and may not apply to certain other jurisdictions.