Stop Wage Garnishment in North Carolina

Dena Standley | July 26, 2023

Edited by Hannah Locklear

North Carolina has some of the most limiting wage garnishment laws. The state prohibits courts from ordering wage garnishment even when the creditor wins the lawsuit. They may use other means, such as bank account levy, but wage garnishment is not an option.

That is not to say that no one can garnish your wages in North Carolina. If you owe a public or family debt, your money can be taken from your paycheck to cover such debts, namely taxes and child support arrears.

A determined private creditor may also get an out-of-state court order to garnish your wages. They do not break any law when they take the money, despite receiving the judgment in a different state.

In this article, we’ll go over North Carolina’s wage garnishment laws and how you can prevent a garnishment from happening or stop it once it’s started.

Avoid wage garnishment through debt settlement.

How does wage garnishment work in North Carolina?

Whenever you are late on a debt, creditors find ways to make you pay. One such legal, widely-used debt collection tool is wage garnishment.

The creditor finds your source of income (employer) and gets a court order directing them to withhold some of your wages. The money goes into paying your debt. Creditors can also garnish other income sources such as rent, commissions, and royalties.

If a creditor sues you, wins a money judgment, and obtains a court order to garnish your wages in another state, your employer must honor the directive. In such a situation, federal laws on garnishments apply.

Federal law (15 U.S. Code Subchapter II) limits the amount and who can take money directly from your paycheck. Below are some of those limitations.

• Garnishments in North Carolina depend on weekly disposable earnings and minimum hourly wage. No matter your pay period, whether monthly, bi-weekly, or semi-monthly, you can determine your weekly wages by dividing the total amount paid monthly by the number of weeks.
• For ordinary garnishments, the weekly limit is 25%. Your employer can only garnish up to 25% of your weekly disposable income to pay credit card and car loans.
• The federal minimum wage is currently $7.25. And an employee must keep at least 30 times that amount after garnishments. So no one can garnish it if you earn $217.50 (30 x $7.25) or less weekly. However, creditors can withhold the difference if your disposable salary exceeds the minimum but is less than $290 (40 x $7.25). If your earnings exceed $290, 25% of it may go to garnishment.

Now, let’s take a look at an example of how wage garnishment works in North Carolina.

Garnishment limits change with debt types. For example, North Carolina G.S. § 110-136 allows an employer to withhold up to 40% of disposable income for child support. Under federal law 15 U.S.C. § 1673, a garnishment for child support that is in arrears can go as high as 65%.

The North Carolina Department of Revenue can garnish up to 10% of a worker's wages for an unpaid tax liability. And the federal government can withhold up to 15% of the disposable income for student loans without a court order.

Can you stop wage garnishment in North Carolina?

Yes. Whether the garnishee is a creditor in a different state, the government, or a family member, you can stop the garnishment or reduce the deducted amounts. Keep reading to learn about your options.

Respond to all debt collection lawsuits

Most wage garnishments start with a lawsuit. If a creditor takes you to court, do not ignore the Summons. You should file an Answer with the court even if you think the debt is not yours. Failure to respond in time can result in a default judgment. SoloSuit can help you generate your Answer in 15 minutes.

Related: North Carolina statute of limitations on debt.

File for bankruptcy

If you file for bankruptcy and succeed, you will be exempted from paying credit card and car loan debts. You will only pay the administrative costs that the court orders.

Consider filing for bankruptcy if the garnishments are becoming too much for you to bear. The ding will negatively affect your credit score and stay there for ten years, but the reprieve you get could be worth it.

Dischargeable debts will disappear while the remaining debts pause until you find your footing. That relief can prove to be the help you need and give you a new start.

Apply for exemptions

In the examples above, you noticed that you remain with a certain percentage after garnishers take their cut. You can ensure no one cuts into your mandatory earnings by tracking how much they take.

Some creditors may overestimate your earnings or use a different method to calculate how much they can take. If creditors take more than they should, you can challenge the order in court. Respond to the Notice of Garnishment of Personal Earnings with a written Notice requesting a hearing.

If you receive money from any of the following sources, the money is exempt from garnishment.

• Disability benefits
• Social Security
• Child support
• Alimony

The IRS also provides opportunities for exemption based on your income and family size. Obtain the form from the IRS and fill it out to claim exemption.

Request hardship assistance

For example, if you are late on student loans, you should have at least 30 days before the creditor can start garnishing your wages. Use the grace period to set up a new payment plan or apply for hardship assistance.

The more your earnings go directly to creditors, the harder it becomes to keep up with groceries, rent, and other basic needs. Even worse, your employer now has to handle additional transactions with the garnishee. If you want to get out of that rut, act fast.

Respond to court Summons in time, apply for hardship assistance, file for bankruptcy, or take advantage of exemptions in North Carolina.

Prevent wage garnishment through debt settlement

Debt settlement can help you prevent wage garnishment.

In a debt settlement, you offer your creditor a portion of the total amount due, usually at least 60% of the debt’s value. In exchange for a lump-sum payment, the creditor agrees to drop its legal claims against you and release you from the remaining balance.

A creditor often considers negotiating a debt settlement if you promise to make a lump-sum payment and clear the remaining amount within a short period. Because of this, debt settlement usually works best if you have some cash saved or expect to receive some money soon

Settling your debt helps you avoid a judgment and wage garnishment. You’ll save some money and move on from this challenging experience.

To learn more about how to settle your debt in North Carolina, check out this video:

SoloSettle, powered by SoloSuit, is a tech-based approach to debt settlement. Our software helps you send and receive settlement offers until you reach an agreement with the collector. Once an agreement is reached, we’ll help you manage the settlement documentation and transfer your payment to the creditor or debt collector, helping you keep your financial information private and secure.

Read Also: How to settle a debt in North Carolina.

What is SoloSuit?

SoloSuit makes it easy to fight debt collectors.

You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.

SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.

>>Read the FastCompany article: Debt Lawsuits Are Complicated: This Website Makes Them Simpler To Navigate

>>Read the NPR story on SoloSuit. (We can help you in all 50 states.)

How to answer a summons for debt collection in your state

Here's a list of guides for other states.

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