Administrative wage garnishment: a federal agency taking your pay

Administrative wage garnishment or AWG, is how a federal agency collects a debt that is not a tax straight from your paycheck. No lawsuit is needed. The procedure is set out in 31 CFR 285.11, under the power Congress gave agencies in 31 U.S.C. 3720D and it applies whatever your state’s own garnishment law says.

of disposable pay is the most the agency can take

15%

of written notice, at least, before the order goes to your employer

30 days

to ask for a hearing and hold the order until it is decided

15 business days

Which debts use administrative wage garnishment

Any federal agency owed money it calls a delinquent nontax debt can use it, either itself or through the Treasury, which collects for many agencies. Common examples are an overpaid federal benefit, a defaulted loan from a federal lending program or a federal grant that has to be paid back. The letter names the agency and the amount.

Two debts run on their own rules. Defaulted federal student loans have their own version under 20 U.S.C. 1095a, also capped at 15%; see student loan wage garnishment. Federal tax debts are collected by the IRS with a levy, which leaves you far less; see IRS wage garnishment.

How much administrative wage garnishment can take

Your employer withholds the smaller of two amounts: 15% of your disposable pay or whatever you earn above 30 times the federal minimum wage, which is $217.50 a week under 29 CFR 870.10. Disposable pay here means pay after taxes, required withholding and your health insurance premiums.

On $800 a week of disposable pay, 15% is $120, so $120 a week can go. On $240 a week, only $22.50 can go, because that is all you earn above $217.50.

If a creditor’s garnishment was served on your employer first, the federal order shrinks so the two together stay at or under 25% of disposable pay. Child support always comes before the federal order.

Your 30-day notice and the 15-business-day window

The notice must tell you what the debt is, how much and that the agency plans to take it from your pay. It also has to tell you about your rights, which are:

• to inspect and copy the agency’s records on the debt,
• to agree a written repayment plan on terms the agency accepts,
• to a hearing on whether you owe the debt, how much or the repayment terms the order would set.

Timing is the whole game. If your written hearing request reaches the agency by the 15th business day after the notice was mailed, no order can go to your employer until the hearing is held and decided. A later request still gets you a hearing, but the order usually goes out anyway. The agency has 60 days from your request to decide and if it misses that, the order has to be suspended from day 61 until it does.

How to stop or lower administrative wage garnishment

1. Ask for a hearing in writing inside the 15 business days if the debt is wrong, already paid or more than you owe. The agency has to prove the debt first.
2. Offer a written repayment plan. The agency can accept a plan you can afford instead of a garnishment.
3. Ask for a hardship review at any time if your situation has changed, for example a disability, a divorce or a serious illness. The agency can lower the amount for a period.
4. Tell the agency about a layoff. After an involuntary job loss it may not garnish until you have been back at work for 12 months in a row.

A bankruptcy filing also puts most collection on hold under the automatic stay. Read bankruptcy and garnishment before choosing that route.

Your job is protected

Your employer may not fire you, refuse to hire you or discipline you because an administrative garnishment order arrived. If you work for the federal government, this order is not used at all: debts you owe a federal agency come out of federal pay through salary offset under 5 U.S.C. 5514, also capped at 15%. See military and federal employee pay.