Wage garnishment is a court or administrative order that requires an employer to withhold a percentage of your wages to repay an outstanding debt. State garnishment laws and Title III of the Consumer Protection Act not only limit how much of your disposable income is subject to withholding, but also protect you from losing your job for a single garnishment order. However, there are no rules that prevent you from leaving your job voluntarily, or legal consequences for doing so.
Voluntary Loss of Employment
A wage garnishment order is valid only as long you earn wages. Without a paycheck, a judgment creditor or federal agency has nothing to garnish. However, this is not a long-term solution, because a creditor can simply file a new garnishment request as soon as you find new employment.
A writ of garnishment order requires that you report not only a change of employment, but also any non-wage income. Income from Social Security, disability, retirement, child support and alimony payments are safe from regular judgment creditors. However, government agencies including the Internal Revenue Service, the Department of Education and the child support agency in your state have the option to seize these funds. In this case, your only option is to appeal the order by proving it will cause undue hardship to yourself and your family. However, a court may not look kindly on quitting your job voluntarily unless you can prove that you quit for a good reason.
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Quitting to Become Self-employed
Quitting a job to start your own business can have unintended negative consequences. Although judgment creditors can't use a wage garnishment in the same way if you're self-employed, they may have the option to use non-earnings garnishments to seize income you receive from self-employment or as an independent contractor, as well as money in a bank account and income from rental property.
While state laws vary on exactly how much a creditor can collect, many give creditors access to up to 100 percent of your expected compensation. This is because unlike with a wage garnishment, which only affects disposable income, a non-earnings garnishment affects your total compensation without any limits.