Wage Garnishment

If you are worried about wage garnishment, you are not alone. The law limits when and how creditors can take money from your paycheck.

What is consumer debt?

Consumer debt is any money you owe for personal, family, or household purchases. These rules and guidelines only apply to consumer debts.

Examples of consumer debts are credit card debts, personal loans, and medical debts.

For consumer debts, your wages can be garnished only:

After you are sued for a consumer debt and a money judgment is entered against you.
AND
You earn over a certain amount after required deductions.

A judgment is a court order that says you owe money.

Note:
Debts owed to the government, such as federal benefit overpayments, student loans, and tax debts, follow a different set of rules.

What is a writ of garnishment?

A writ of garnishment is a court order that tells your employer or bank to take some of your money to pay your debt to a creditor.

Will I be told my paycheck will be garnished?

Your employer must be served with the wage garnishment packet. The packet comes from the creditor/creditor’s attorney, who also files a writ of garnishment with the court.

Your employer needs to look at your most recent paystub and fill out the answer form. An answer is the written response filed with the court.

Your employer must tell you about this.

When will my employer tell me about my paycheck garnishment?

Employers should give you 3 things:

The writ of garnishment
A copy of their answer filled out with their calculation, and
A blank copy of the objection form with the first paycheck affected by the garnishment.

Sometimes employers will provide this digitally on a portal. Whether it be a digital copy or physical, they should include all 3 of these documents.

Important!
If your employer does not give you notice prior to garnishing your paycheck, you can file an objection with the court and argue that the writ is invalid, and ask that your garnished wages be returned.

Did your employer calculate your garnishment the right way?

When your employer gets a wage garnishment order, they must do calculations to see if they can legally take money from your paycheck. If you make enough money, your employer must withhold part of your check to be given to the creditor to pay off the judgment.

If you do not earn enough money, they should not take anything from your paycheck. The most that can be withheld via wage garnishment for most debts is 20% of disposable wages.

Sometimes payroll software systems may take an automatic 20% regardless of amount, or the software may use federal minimum wage when calculating instead of Colorado’s minimum wage. Colorado minimum wage is double the federal minimum wage so it’s a huge difference.

How do they calculate how much should be garnished?

You need to figure out your disposable earnings. Disposable earnings is the amount of money left from your paycheck after required deductions are taken out.

What are required deductions?

Required deductions are amounts that employers are required by law to take out of paychecks. These include:

Employer healthcare insurance premiums
Social Security
Federal income tax
Colorado State income tax
Medicare tax
Local income tax (if applicable)
Colorado FAMLI deductions
Mandatory retirement contributions

What are voluntary deductions?

Voluntary deductions are considered part of your disposable earnings. Examples of voluntary deductions are:

Vision or dental insurance premiums
Voluntary retirement contributions
Life insurance premiums

Note:
If it’s a tax, it is likely a mandatory deduction.

Take your total income before required deductions, then subtract the required deductions. The amount you are left with is your disposable earnings.

How do I figure out my protected wages?

Once you figure out your disposable earnings, you need to figure out your statutory exemption. The statutory exemption is how much of your wages are protected under Colorado law.

Step 1: Figure out how often you get paid.

Weekly: You get paid once a week
Biweekly: You get paid once every 2 weeks. If your pay dates seem random and often change month-to-month, you are likely on a biweekly pay schedule. You will also receive 26 paychecks for the year.
Semi-monthly: You get paid twice a month. If your pay dates seem uniform and you get paid on either the 1st and the 15th or the 15th and the last day of the month, then you are likely on a semi-monthly pay schedule. You will receive 24 paychecks for the year.
Monthly: You get paid once a month

Step 2: Take your pay schedule and look up the corresponding number, take the Colorado state minimum wage for the current year and multiply the two numbers.

You can find the current minimum wage amount on the Colorado Department of Labor and Employment website.

Weekly: 40 x minimum wage =
Biweekly: 80 x minimum wage =
Semi-monthly: 86.67 x minimum wage =
Monthly: 173.33 x minimum wage =

Write down the number you get.

Step 3: Do this calculation to figure out 80% of your disposable earnings.

.80 x disposable earnings =

Look at the number you got from Step 2 and compare it to the number you got in Step 3. Whichever number is bigger is your statutory exemption.

Step 4: Subtract the statutory exemption from your disposable earnings.

If you get a negative number, this means that nothing should be garnished from your paycheck. If you get a positive number, this is the amount that should be garnished.

Disposable earnings – statutory exemption = amount garnished

Note:
If your wages vary with every paystub, you should confirm the calculation is correct every time. Your employer is supposed to do a new calculation every pay period. The new calculations do not need to be filed with the court.

What if my employer’s math is wrong or they are incorrectly withholding?

If you think your employer made a mistake, you have 7 days to contact them after learning about the problem and ask them to fix it.

If your employer does not want to fix it, you have another 7 days to file an objection with the court.

What happens next?

You can file Form 28: Objection to Calculation of the Amount of Exempt Earnings or for Reduction of Withholding Pursuant to Subsection 13-54-104(2)(a)(I)(D).

When filling out this form, you want to fill out the caption, the first part with identifying information, and section 1.

Note:
When filing objections with the court, you must give your employer a copy and send copies to the creditor’s attorney.

What if my employer’s math is correct?

Keep an eye on all future paystubs and make sure the calculations are correct going forward.

What if I cannot afford the garnishment?

If you are getting garnished and the amount is correct, but you still can’t afford it, you can file a hardship objection. A hardship objection is a legal request to a judge to stop or lower a debt collection because you can’t pay for your needs.

To file a hardship objection, you need to complete Form 28: Objection to Calculation of the Amount of Exempt Earnings or for Reduction of Withholding Pursuant to Subsection 13-54-104(2)(a)(I)(D).

When filling out the form for a hardship objection, you only need to fill out the caption, the first part with your identifying information, and section 3—the income and expense chart. Because the chart in the form is pretty basic, you can always attach a more detailed income and expense chart.

When filling out a hardship objection, be as specific as possible and be prepared to show the judge bills and utility bill statements during the hearing. If you have a yearly expense (renters’ insurance, car maintenance, etc.), divide it by 12 and put that monthly amount in the chart.

Note:
When filing objections with the court, you must give your employer a copy, and send copies to the creditor’s attorney.

When sending copies to the creditor’s attorney and your employer you should send:

1 via regular U.S. Postal Service USPS mail
AND
Another via certified mail with a return receipt requested.

Need more help?

If you are low-income, a senior, or a veteran, you may qualify for free legal help from Colorado Legal Services (CLS). To apply or ask if you might qualify, go to the CLS website and find the office that serves your area. If you call or visit, CLS can help you in your native language.

You can get help from the courts. Every judicial district has staff called “Sherlocks” to help people with their legal questions. To find the Sherlock in your county, visit the Judicial Department’s Sherlock webpage.