What Are Disposable Earnings?
Disposable earnings are what remains of your paycheck after the deductions the law requires. Not what hits your bank account. Not what is left after bills. Just gross pay minus legally required withholding.
That one number controls how much of your paycheck a creditor can garnish in Kentucky. Get the definition wrong and every estimate that follows is wrong too. Here is the correct math, start to finish.
What Comes Out, and What Does Not
To find the number, subtract only what the government makes you withhold:
- Federal, state, and local income taxes
- Social Security and Medicare taxes
Here is the part that surprises people. Voluntary deductions do not count. Health insurance, 401(k) money, and union dues all stay in the number. So this number is usually higher than your take-home pay. The math runs on a bigger figure than the deposit you actually see.
Earnings means more than salary. Wages, bonuses, commissions, and pension payments all count.
How Much Can Be Garnished in Kentucky
For ordinary debts like credit cards, medical bills, and old loan balances, Kentucky follows the federal limits, and KRS 427.010 mirrors them. Each week, a creditor may take the lesser of:
- 25% of your disposable earnings, or
- The amount of that weekly number above $217.50, which is 30 times the federal minimum wage
In practice that creates three bands:
- At or below $217.50 a week: nothing can be taken
- Between $217.50 and $290: only the amount above $217.50
- At $290 or more: up to 25%
A quick example. You gross $800 a week, and required withholding takes $160. Your disposable earnings are $640. Since that is above $290, the creditor can take 25%, which is $160 a week. Notice the health insurance premium you pay never entered the math.
For biweekly paychecks, double the thresholds: nothing at or below $435, and the 25% cap applies at $580 and up.
The Debts That Break the Caps
The 25% ceiling protects you from ordinary creditors. A few debts play by different rules:
- Child support and alimony. Court orders for support can take up to 50% of disposable earnings if you support another spouse or child, and up to 60% if you do not. Five percent more can be added when payments run more than twelve weeks behind.
- Federal and state taxes. Tax collectors are not bound by these limits and use their own formulas.
- Certain bankruptcy court orders. A Chapter 13 plan order is not capped by these limits either, because the plan payment is set by your budget instead.
- Defaulted federal student loans. These can be collected from your pay through a government process with its own separate cap, no lawsuit required.
Disposable Earnings Are Not “Disposable Income”
The two terms sound identical and mean different things. Disposable earnings decide how much a creditor can garnish from a paycheck. Disposable income is a bankruptcy term that helps decide what you can afford to pay creditors in a case. The deductions, the time periods, and the purposes all differ. If you are weighing bankruptcy, the number that matters is the one from Chapter 7’s means test, not the garnishment formula on this page.
Losing 25% Is Optional
A garnishment at the full 25% takes $8,320 a year from that $640-a-week paycheck. Bankruptcy usually ends it in days:
- The automatic stay stops the withholding as soon as the case is filed, and your employer is notified to quit withholding.
- The judgment debt behind it gets discharged, so nothing restarts.
- Pay taken shortly before filing can sometimes be won back, and our article on getting garnished wages back explains when.
Our guide to ending a garnishment through bankruptcy walks through the timeline paycheck by paycheck.
Frequently Asked Questions
For ordinary debts, the combined total is still capped at 25%. A support order takes priority, and a large support withholding can leave nothing for an ordinary creditor to reach.
Federal law bars an employer from firing you because your wages are garnished for any one debt. The protection weakens when a second, separate debt brings another order, which is one more reason to deal with the first one quickly.
Yes. The limits apply the same way to wages, bonuses, commissions, and pension checks. The percentage caps still apply to the total.
Yes. Nick Thompson serves Jefferson, Oldham, Bullitt, Spencer, Nelson, and Meade counties. Bring a pay stub and the garnishment order, and the first consultation is free.
Run Your Own Numbers, Then Call
Take your last pay stub, subtract only the required withholding, and apply the bands above. If the answer scares you, remember it is a choice, not a sentence. Nick Thompson has practiced law since 1988 and has stopped garnishments for Kentucky workers since 1991.
Call 502-625-0905 for a free consultation at 800 Stone Creek Parkway, Suite 6, Louisville. Most garnishments can be stopped before your next payday.
