John Roska: How a government can (legally) take your money

Q: I'm a state employee. Several years ago, I got a grant while attending a state school. That school recently sent me a letter, saying I owed them nearly $10,000. They said that If I didn't pay in full, they'd send the debt to the Comptroller, who'd start garnishing my paychecks from the State of Illinois. If I haven't been sued, can they do that? How much can they take?

A: This is an example of an administrative garnishment, that doesn't require a court case. It's done to recover government debts, owed to state, local, or federal agencies.

Most garnishments require the creditor first to sue you, and get a judgment against you in court. That court judgment officially settles much you actually owe. The creditor can then try to enforce their judgment by garnishing your wages.

That goes for "regular" debts, owed to private creditors for things like home and personal loans, credit cards, and medical bills.

When you owe the government, they usually have special ways to collect. They can skip the court case, and go straight to a garnishment.

For student loans, for example, the Illinois Student Assistance Commission can just send a notice to your employer, requiring them to start deducting from your wages to repay your school loan. You get a chance to dispute the debt, but if it's valid, your employer can garnish the same amount as if somebody had gotten a judgment against you in court.

The IRS and the Illinois Department of Revenue can do the same thing to collect unpaid taxes. And child support can be enforced through administrative garnishments, without a court order.

Usually, the amount your employer can deduct for an administrative garnishment is limited. For regular debts (not child support) it's the limit on wage garnishments that go through courts. That limit says nothing at all can be garnished if your take-home pay—before any garnishment—is under $371.25 a week. Once you're over that threshold, the garnished amount should be the lesser of either 15 percent of your gross pay, or the amount of your weekly net pay over $371.25.

Unfortunately, it's different when you work for the state of Illinois. Then, the Comptroller writes your checks, and an Illinois law permits them to deduct 25 percent of your net pay for an administrative garnishment. That could often take more than the usual 15 percent-of-gross.

Even worse, though, is that there's no minimum that your wages have to exceed before a garnishment can begin. The usual threshold of $371.25 per week of net pay doesn't apply when the Comptroller does the deducting. Regardless of how small your net may be, their office says they'll take 25 percent of it.

The law permits the Comptroller to make this deduction when you owe money to the U.S. Treasury, the state of Illinois, a unit of local government, a school district, and "a public institution of higher education." That lets lots of possible creditors skip the court system, and garnish more than they could if you weren't a state employee.

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