Having your wages garnished is frustrating and difficult to cope with when you're already struggling financially. What happens, however, when you aren't actually an employee? If you're an independent contractor who works for yourself, does a garnishment order still apply?
Well, there's good news and bad news.
First, garnishment orders can't be used against independent contractors. If the person paying the contractor receives such an order, it's invalid because they are not paying the contractor actual wages.
The bad news is that if the independent contractor is set up as a valid limited liability company and pays himself or herself a wage, then the garnishment order is valid and must be applied.
In addition, it is always possible for the creditor to go through the court and get a new order called a "non-earnings" garnishment -- which can then be sent to the employer who is paying the contractor. That is a valid order and lacks the protections applied to ordinary wage earners. (In other words, the limits on garnishment -- which can only be 25% of a debtor's disposable income at maximum or 30 times the minimum wage in the state) don't apply. If that happens, the debtor may find himself or herself receiving nothing for his or her labors.
Garnishment can be a tricky issue. How far a creditor may take an issue often depends on the size of the debt and the aggressiveness of the creditor. If you're concerned about your situation regarding an order of garnishment (or even think that one is about to happen), don't hesitate to get experienced legal assistance.