Garnishment in California is a practice creditors can use to recover amounts owed from debtors who do not pay of their own accord. For example, wage garnishment is when a creditor collects part of the debtor's wages or income sent to the creditor, to fulfill the debt. Money held by third parties, such as money in a bank account, could also be garnished.
Garnishment is an apparatus for enforcing a judgment. Therefore, in most cases a creditor has to file a lawsuit and obtain a judgment to create its right to the money. For instance, the IRS does not have to obtain a judgment first.
Social Security is usually exempt from garnishment under California state law.
California's garnishment exemptions include:
* Pensions: all public and private retirement benefits are protected, including distributions from IRAs, state and county worker benefits, and firefighter or police office benefits.
* Public benefits or assistance: workers' compensation; unemployment benefits; aid to families with dependent children; aid to the blind, disabled, and aged; student financial aid; relocation benefits; union benefits owing due to a labor dispute.
* Insurance benefits: disability and health benefits; life insurance proceeds if the policy prohibits proceeds them from being used to pay creditors; matured life insurance benefits, up to the amount needed for support; homeowner's insurance proceeds.
California follows federal law to determine the maximum amount that can be garnished. The lesser of the following may be garnished:
* The amount by which a debtor's weekly income exceeds 30 times the minimum wage.
* 25% of disposable income, with "disposable income" defined as income left after legally required deductions from a person's paycheck. Only legally mandated deductions are considered in calculating disposable income-other obligations or deductions, even ones enforced by employer policy (e.g. deductions for health insurance), are not counted. Therefore most of a person's income will be considered "disposable income."
However, note that the 25% rule applies for most debts. There are certain debts, like taxes or child support, where the 25% rule doesn't apply.
Statute of Limitations
Once the creditor obtains a judgment for money owed, the creditor has up to 10 years to take any action to collect. During the 10 years following the judgment the creditor may garnish the debtor's wages.
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