What is garnishment in a financial context?

Garnishment in a financial context refers to the legal process through which a portion of a person's earnings, often from their paycheck, is withheld to satisfy a debt owed to creditors. This typically occurs after a court order has been issued, allowing creditors to collect what is owed directly from an individual's income. The process is commonly used for various debts, including unpaid loans, child support, and tax obligations.

This method is a means for creditors to secure payment without relying on the borrower's voluntary compliance. The specific percentage of income that can be garnished varies based on state laws and federal guidelines, ensuring that individuals retain some portion of their earnings for their living expenses. Understanding garnishment is crucial for individuals facing financial difficulties, as it highlights the serious consequences of unpaid debts and the potential impact on their monthly income and overall financial stability.