When someone owes your business money, it can be hard to get them to pay. Some people fall behind on their financial obligations through no fault of their own. Others willfully refuse to work on paying off their outstanding debts.
If someone owes your company money and refuses to pay or has fallen substantially behind on payment arrangements, you might need to engage in collection activity. Sometimes, you may even need to take them to court.
A garnishment of their wages is a way to effectively force them to repay the debt. Through a judgment from the court, you can receive a portion of someone’s paycheck without them ever voluntarily submitting those funds to you. What do you need to know about garnishment in Kentucky as a creditor?
There are limits to how much of their income you can request
You cannot demand so much of someone’s income that they can no longer support themselves or their dependents. There are federal rules that limit the garnishments a creditor can seek from an individual.
The person who owes you money can protect a certain amount of their income. Specifically, they can exempt 30 hours of minimum wage compensation per week. If their total income amounts to less than that, your garnishment likely won’t result in the repayment of the debt. However, if their income is higher than that, you could potentially garnish up to one-fourth of the person’s net income.
Understand the limitations on garnishment as they apply to a debtor’s overall wages can help you determine whether pursuing a garnishment as part of collection activity is in your company’s best interests.