Wage Garnishment / After Paid In Full

What Happens After A Wage Garnishment Is Paid And How To Stop It

Written by Ben Tejes
Updated Jun 14th, 2023

Creditors have several legal ways to collect a debt. Wage garnishment is one way a creditor can recover money owed to the creditor. Federal and state laws govern wage garnishments. State laws vary by state. Unfortunately, it can cripple your ability to pay normal living expenses and other debts.

1) What is a Wage Garnishment? 

A wage garnishment is typically an order that gives a creditor the right to receive a portion of your wages each pay period to repay a debt. The garnishment continues until the debt is payable in full. The types of debt collected vary by state. In some states, only the federal government and state agencies may garnish wages. However, other states allow general creditors to obtain wage garnishment orders. 

2)What Happens When the Wage Garnishment is Paid? 

The wage garnishment continues until the debt is payable in full. Once the debt is paid, the creditor should notify the employer to stop deductions for the debt. It is difficult to stop a wage garnishment after it begins. The time to fight it is during the debt collection lawsuit or before the garnishments begin.

3) How To Stop Wage Garnishment

There are several options that you can do to fight and stop wage garnishment. If you do not owe the debt, you can fight the debt collection lawsuit. An attorney can help you fight a debt collection lawsuit.

You may also negotiate with a creditor to set up a payment plan directly with the creditor. In some cases, you might be able to negotiate a lump-sum payment to settle the debt in full. However, lump-sum payments also have drawbacks. You must have the money available to pay the creditor immediately. The forgiven debt is typically counted as income for tax purposes. Therefore, you may owe income taxes the following year, depending on the size of the debt forgiven.

Bankruptcy stops wage garnishments. If the debt is eligible for discharge (forgiveness) in bankruptcy, filing bankruptcy stops the wage garnishment and prevents the creditor from taking any actions to collect the debt, even after you complete the bankruptcy case. A no-asset Chapter 7 bankruptcy case could get rid of the debt in four to six months if you meet Chapter 7 income requirements, and the debt is eligible for a bankruptcy discharge. 

If the debt is not eligible for a bankruptcy discharge, you might want to consider filing under Chapter 13. Chapter 13 is a bankruptcy repayment plan. The amount you pay through your bankruptcy plan may be less than the amount of wage garnishment. You can estimate the amount of your Chapter 13 plan with our Chapter 13 calculator

There are many options, but the options tend to be complex in relation to the costs and the pros and cons of those options. You may be interested to take our Wage Garnishment Debt Relief Options Calculator below for more information about your options and estimated costs of those options.

4) How Do Creditors Garnish Your Wages?

In most states, a creditor must obtain a personal judgment before the creditor garnishes wages. Therefore, the creditor must file a debt collection lawsuit. Examples of debts that might result in a debt collection lawsuit include, but are not limited to, medical bills, credit card debts, personal loans, and deficiency amounts. You are served with a copy of the lawsuit and have a specific number of days in which to file an answer or other response to the lawsuit. If you do not respond to a debt collection lawsuit, the court grants a default judgment in favor of the creditor.

After receiving an order granting a personal judgment, the creditor requests a wage garnishment order from the court. The court forwards the order to your employer. You also receive a copy of the garnishment order. Even though you have a short period to respond to the wage garnishment order, it is difficult to stop your wages from being garnished at this point.

5) How Much of My Wages Can a Creditor Take?

The amount of your wages that can be garnished varies by state. Some states set a maximum amount for wage garnishment. Other states follow the federal rules for garnishing wages. Some income is not subject to wage garnishments, such as income or benefits paid under the Social Security Act. However, most other types of income are subject to wage garnishment. Under federal law, the amount of money a creditor may collect through wage garnishment is based on a person’s disposable earnings. 

Your disposable earnings are the income you receive after legally required deductions (i.e. income taxes and mandatory retirement savings). Voluntary deductions, such as life insurance and voluntary retirement accounts, are not deducted from gross earnings to calculate the amount of disposable income for wage garnishments. 

Except in the case of garnishments for alimony, child support, and federal or state taxes, federal wage garnishment laws set a maximum. A wage garnishment order may require an employer to withhold the lesser of 25 percent of disposable earnings or the employee’s disposable earnings that exceed 30 times the federal minimum wage. In some cases, you might request a reduction in the amount of the garnishment if you meet specific hardship guidelines.

Again, state laws for wage garnishments vary. You may want to consider checking out our article that provides wage garnishment by state. However, this is not legal advice. It is important to speak with an attorney in your state if you receive a wage garnishment order to determine your rights regarding it.

6) Can SSI payments be levied or garnished?

No, according to the Social Security Handbook, SSI payments cannot be garnished or levied. That said, Treasury's Financial Management Service can offset or reduce your Social Security benefits to collect a debt owed to federal agencies such as student loans to the department of education.


Ascend allows you to compare your debt-relief options to determine if bankruptcy or other debt-relief options is the best way for you to get out of debt. Take the calculator below or shoot us a question directly at support@tryascend.com. We will do our best to answer your question quickly.