Wage Garnishments In Vermont

Wage garnishment is a tool creditors can use to collect past-due debt from you. Wage garnishments allow creditors to take part of your paycheck to repay your debt, which can really hurt come payday. Though they must usually get a court order first. This article will help you understand what a wage garnishment is, how it works in the Green Mountain State, and what you can do about it. 

What Is Wage Garnishment?

Wage garnishment is a legal procedure that allows creditors to take a certain amount of your earnings. Most creditors are required to get a money judgment from the court before they can collect on a consumer debt through wage garnishment. A judgment is a court order that requires your employer to withhold money from your paycheck for repayment of consumer debt like credit card debt or medical bills. In Vermont, wage garnishments are legally known as a trustee process against wages. 

Federal and state laws limit how much of your income can be garnished. Some income is also exempt from garnishment entirely.

Who Can Garnish My Wages in Vermont?

Creditors, debt collectors, and debt buyers who have a judgment against you can garnish a portion of your wages. A judgment is the end result of a lawsuit. If you fall behind in paying your credit cards, student loans, or medical bills, the creditor can sue you to recover what you owe them. If you don’t answer the lawsuit, the court will likely issue a default judgment against you. The creditor who brings the lawsuit is called the judgment creditor and the person being sued is called the judgment debtor.

Under Vermont law, judgment creditors have several tools to collect on past-due debts. Wage garnishment is one of them. Creditors may also be able to garnish your bank account with a bank levy.

Some types of debt have special rules. If a creditor is seeking to recover child support or student loans, they may not have to get a court judgment to garnish your wages. The same is true if the IRS is trying to recover back taxes. They may also be able to garnish a larger portion of your wages than creditors collecting for consumer debt. This article focuses on wage garnishment for non-special consumer debts, such as credit card debt or medical bills, where creditors must first get a judgment.

Vermont Wage Garnishment Process

Under Vermont law, if you don’t pay a judgment within 30 days, the creditor can apply for a garnishment order. The creditor needs to file a Motion for Trustee Process against earnings. The creditor will need to know the name and address of your employer because they are the trustee in this process. The judgment creditor will have to file a sworn affidavit with this motion. 

Your employer will be required to verify how much they pay you. If your employer verifies that they give you a paycheck, and you don’t successfully challenge the garnishment, the court will enter an order for the garnishment. At this point, a sheriff or constable (a licensed peace officer) will serve you with:

• A Trustee Summons

• The Motion for Trustee Process

• Notice of the court hearing listing the date and time of the hearing

• A Trustee’s Disclosure of Earnings Form (this is the form your employer will complete).

The Motion for Trustee Process will state the amount you owe in the judgment. You should attend the court hearing and raise any objections you have. For example, if you don’t agree with the amount the creditor says you owe, you should raise that at the hearing.  

One way to prevent a wage garnishment would be to raise a statute of limitations objection. The statute of limitations is the time that a creditor has to bring a debt collection lawsuit. Most consumer collection actions must be brought within six years. This objection should be raised during the lawsuit. After the creditor gets a judgment, the creditor has eight years to enforce it. So, the creditor can’t garnish your wages if eight years have passed since a judgment was entered against you. You should raise this objection when your wages are being garnished. 

How Much of My Paycheck Can Be Taken by Wage Garnishment?

Federal law and Vermont state law limit the amount that can be garnished from your paycheck. Under federal law, a judgment creditor can garnish the lesser of: 

• 25% of your weekly disposable income, or

• The amount your weekly disposable income exceeds 30 times the federal minimum wage ($7.25 x 30 = $217.50)

Vermont’s wage garnishment law follows this federal law to calculate how much of your disposable income can be garnished each week. Disposable income is the amount left in your paycheck after required deductions have been taken out. These deductions include federal, state, and local taxes, and Social Security. 

So, for example, if your weekly disposable income is $600, 25% of your weekly disposable income would be $150. Under Vermont law, a creditor can garnish the lesser 25% of your disposable income ($150) or 30 times the federal minimum wage ($217.50). So in this case, the creditor could garnish $150.

Vermont offers more protection against wage garnishment if your debt arose from a consumer credit transaction. In that case, 85% of your disposable earnings is exempt or 40 times the federal minimum wage, whichever is greater. And with a court order, even more of your income may be exempted from wage garnishment than the defaults set by the law. To get this order, the court needs to find that you have reasonable weekly expenses that exceed the exemption limits. 

So, per paycheck garnishments are limited. But, whatever the limits are on wage garnishments, they can never exceed the judgment amount plus costs, fees, and interest. 

Exemption laws protect many sources of income from debt collection. Federal law and Vermont state law exempt the following:

• Social Security can’t be garnished under federal law except for alimony, child support, and some federal government debt. Vermont law protects Social Security from garnishment if the recipient needs it.

• State and municipal workers’ pensions and retirements are protected under state law. IRAs are also protected up to a certain amount.

• Public benefits and assistance are protected, including unemployment compensation, aid to people with disabilities, and crime victims’ compensation.

• Wrongful death and bodily injury awards are protected up to a certain amount. So is workers’ compensation.

• Insurance and annuities are protected under certain conditions. 

How To Stop a Garnishment in Vermont

You can stop a wage garnishment by paying off the debt. If you have it, you can do this with a lump-sum payment, or you can try to make an agreement with the creditor to pay the debt in installments over time. Otherwise, you can let the garnishment play out until the debt is paid. Wage garnishment stops when the debt is paid in full.

Bankruptcy is also a great tool to stop a wage execution. Filing a bankruptcy petition usually stops wage garnishment because the court issues an automatic stay. This requires all creditors and debt collectors to stop collection actions while your bankruptcy case is open. Also, if you are struggling to pay your debt, a bankruptcy filing can offer you debt relief. Many debts are dischargeable in bankruptcy, such as credit card debt or medical debt. You can contact an attorney to discuss your options. If you can’t afford an attorney, you may be able to file Chapter 7 bankruptcy for free using Upsolve’s filing tool.

Are There Any Resources for People Facing Wage Garnishments in Vermont?

If you need legal advice dealing with a wage garnishment and can’t afford to pay for an attorney, legal aid provides free or low-cost legal help and is available through certain nonprofit organizations. You can also look to the following local resources:

• VTLawHelp.org can help answer your legal questions. 

• Vermont legal aid can help with free or low-cost legal help.

• The Vermont Judiciary website contains a complete explanation of the wage garnishment process.