In Hawaii, wage garnishment is a legal procedure where the court orders an employer to withhold a specified percentage of a worker’s paycheck for repayment of debt. For Hawaii residents that are struggling financially, wage garnishment can be devastating. Legally, you have options to prevent or stop wage garnishment from ruining your financial future.

Hawaii Wage Garnishment Limits

Both state and federal laws exist, detailing how much can legally be withheld from a worker’s paycheck. These laws are put into place to provide a fair resolution for debt repayment, while ideally not placing the garnished employee under financial stress.

While these guidelines are intended to be fair, wage garnishment can still result in financial hardship, depleting already limited resources and resulting in even more debt.

State and federal laws provide two different metrics for the calculation of garnished wages. The employer must use the calculation that is most financially advantageous for the worker. In most cases, this results in wage garnishment being calculated under Hawaii’s law.

Under Hawaii’s Wage Garnishment Laws:

• Wage garnishment is to be calculated based on disposable income. For the purpose of wage garnishment, disposable income is the amount of take-home pay after taxes, social security, health insurance, or other employer deductions have been taken out
• Disposable income does NOT factor in necessary expenses such as housing, living expenses, transportation, etc.
• A 5% wage garnishment is withheld on the first $100 in disposable income for the month
• A 10% wage garnishment is withheld on the next $100 in disposable income for the month
• A 25% wage garnishment is withheld on all disposable income over $200 for the month
• Note that these amounts are per month, and that weekly or bi-weekly payments will be calculated accordingly

Bankruptcy Halts Wage Garnishment Proceedings

If you file for bankruptcy, all wage garnishments will be stopped until the bankruptcy has been concluded.  Depending on the outcome of your bankruptcy proceeding, the wage garnishment may be taken out of your earnings again.  This may happen if you file Chapter 13 and file a plan for repaying all of your creditors.

Wage garnishments can be confusing.  If you are unsure whether your garnishments are correct, always contact a bankruptcy attorney to help you make sense of them.  In the case of child support, make sure you notify the proper agency if you change jobs or your child has reached the age of 18.  If you do not continue making the payments, a larger garnishment could be set to collect the back support you owe.

Wage Garnishment Under Federal Law: Federal wage garnishment guidelines can be more advantageous for the lowest income workers typically resulting in higher payments for anyone making more than $942 per month in disposable income. 

• Federal wage garnishment guidelines are a three-tiered system, where the lowest tier, or those making less than $942 per month, are exempt from wage garnishment.
• Individuals making between $942 and $1256 are required to pay in any amount of disposable income over the $942 threshold.
• Individuals who make more than $1256 per month in disposable income will pay 25% of their disposable earnings.

Types of Garnishments

As attorneys who work with clients to repair and rebuild their financial futures, we’re often asked who can sue for a past debt and request the garnishment of wages. The answer is essentially any creditor with whom you have a legal debt. There is a process that occurs before a writ of garnishment is issued, including the opportunity to dispute or negotiate the debt.

A writ of garnishment in Hawaii can be issued if the court determines a debtor owes a creditor money, the debtor hasn’t paid, and the garnishee has income or assets that can be used to satisfy the debt. You may also have your wages garnished for certain non-medical, non-consumer debts under federal and state laws.

IRS

If it has been determined that you owe the IRS back taxes and/or penalties, your best option is to work with them to settle on a reasonable payment plan. Ignoring the IRS is never a good idea but if a tax debt goes unsettled, they can permit a levy against your assets.

What this means is that the IRS can legally seize your assets, take money directly from your bank accounts, and garnish your wages.

Student Loans

The average student loan debt for graduates with undergrad degrees is more than $30,000. This is a tremendous debt, and student loan payments can equal what you’re paying in housing costs. Fortunately, several repayment options work with your current financial situation but it’s still easy to fall behind on payments.

When you default on a student loan, the entire amount of the debt immediately becomes due. When this happens, additional fees and interest apply and your debt suddenly snowballs. Unfortunately, student loan debt is rarely forgiven in bankruptcy and creditors can sue for repayment via wage garnishment.

Child Support

Wage garnishment for back owed child support is a special circumstance. Certain types of income that may be exempt from wage garnishment in other cases are not exempt in the case of owed child support. The amount that can be withheld is also greater.

The Consumer Credit Protection Act places a limit of 50% of disposable earnings when the non-custodial parent is living with a second family, and 60% if living on their own. This amount can increase if payments continue to go into long-term arrears.

Bankruptcy and Wage Garnishment

It’s a road that many are hesitant to take but bankruptcy can be your best option for halting wage garnishment and regaining your financial footing. When you file for bankruptcy, any attempts at seeking a writ of garnishment are immediately stopped and you have protection against future attempts.

There are two different types of bankruptcy, Chapter 7 and Chapter 13. Chapter 7 bankruptcy wipes the slate clean of most debts, except for student loan debt and child support. Because debts are nullified, creditors can no longer take legal action against you.

Chapter 13 is somewhat different in that your debts are not completely erased. Instead, the amount of your debt is negotiated and a manageable payment arrangement is made. This allows you the opportunity to have some degree of control in how much money you’re paying toward your debt every month, unlike the case with wage garnishment.

Exemptions

Federal and state exemptions exist that protect certain types of income from wage garnishment. This includes:

Social Security – Income from social security is exempt from wage garnishment, except in the case of owed child support or alimony payments. Wage garnishment may also be issued against social security income in the case of certain federal debt, including back taxes owed to the IRS.

Public Benefits and Assistance – Monetary benefits from public financial assistance programs, unemployment compensation, workers compensation, and work relief programs are exempt from wage garnishment in most cases. In some instances, owed child support or alimony may affect public assistance benefit amounts.

Insurance Benefits – Insurance payments to beneficiaries, including life insurance, annuity contracts, and disability benefits are exempt from wage garnishments.

Pensions – In the state of Hawaii, pensions for public service workers, including law enforcement, firefighters, and other state or public workers is exempt from wage garnishment.

FAQs

Bottom Line

If you’re facing financial hardship and feel as though you’re drowning in debt, you’re not alone. Wage garnishment can take an already stretched budget and cause it to snap. Know that there are options available to you in Hawaii, including bankruptcy, that can help you regain control of your finances and rebuild your future.