As someone who operates a business in Ohio or another state, a time may come when you struggle to collect money owed to the business. You may initially try to encourage the non-paying party to pay you by sending demand letters or making follow-up phone calls. However, if you get the feeling the party owing you money is avoiding you, you may need to take things a step further.
According to NerdWallet, one potential way to recover money owed to your business is to try to garnish the indebted party’s wages.
How wage garnishment works
Wage garnishment requires you to get a court order to take some of the indebted party’s wages. The indebted party’s employer receives a notification about the garnishment proceedings and then has a legal obligation to withhold part of the employee’s wages until he or she becomes current on the debt. Wage garnishment is not uncommon, with more than 10% of workers between the ages of 35 and 44 having some of their wages garnished within one recent calendar year.
How much of someone’s wages are subject to garnishment
There are limits to how much of a worker’s wages an employer must withhold. The most an employer may take each week is either 25% of the paycheck or the amount by which a worker’s weekly income exceeds the current federal minimum wage. The employer must withhold whichever amount comes out to be lower.
An employer typically continues to garnish the wages of an indebted worker following a court order until the indebted party pays off the debt in full. Sometimes, the debtor may also become responsible for court fees or interest stemming from the garnishment.