Glossary
Wage garnishment
A court- or agency-ordered deduction taken directly from your paycheck to repay a debt — the end stage of an unresolved default.
Wage garnishment lets a creditor collect a debt by having your employer withhold part of your paycheck directly, after winning a court judgment (for most debts) or, for federal student loans and taxes, without needing one first. Federal law caps how much of your disposable income can be garnished, and some income (Social Security, certain benefits) is generally protected. It represents the far end of the collections process — reaching a payment arrangement, disputing the debt, or negotiating a settlement earlier almost always beats letting a case reach this stage.
Related terms
- Line of credit A revolving credit limit you can draw from, repay, and draw again — you pay interest only on what you actually use.
- Balloon payment A large lump sum due at the end of a loan term, after years of smaller payments that didn't fully pay off the balance.
- Secured A loan backed by an asset the lender can seize if you default — a house, a car, or a deposit.
- Credit freeze A free lock you place on your credit file that blocks new lenders from accessing it — the strongest defense against identity-theft fraud.
- Escrow A holding account your servicer uses to collect and pay property taxes and insurance alongside your mortgage payment.
- Secured credit card A credit card backed by a cash deposit you make upfront — the deposit becomes your credit limit, and it is the standard tool for rebuilding credit.