Sarah Edwards | July 05, 2023
Edited by Hannah Locklear
Summary: Hawaii has complex wage garnishment laws that can take a big part of your income if you lose a debt lawsuit. Luckily, there are ways to avoid wage garnishment like responding to a lawsuit with an Answer or settling the debt before your court date. SoloSettle makes the debt settlement process easier.
A wage garnishment is a legal order that creditors use to seize part of your income after you stop paying your bills. Fortunately, creditors can’t garnish your wages simply because you missed a few payments. They must sue you and win their case before they can begin the wage garnishment process.
Of all fifty states, Hawaii has some of the most complex (and confusing) laws concerning wage garnishment. If you’re a resident of Hawaii, it’s smart to understand how these laws work if you’re facing a debt lawsuit or think a creditor may sue you in the future.
While the federal government has provisions for wage garnishments, states can set their own limitations, too. States that establish wage garnishment limitations must choose limits equal to or less than the federal government’s rules. Under HI Rev Stat § 652-1, creditors may garnish wages according to the below amounts:
However, before applying the Hawaii rules, the employer must compare the garnishment amount with the federal limitations on wage garnishment. Under 15 U.S. Code § 1673, the garnishment is the lesser of:
In both the federal and Hawaii limitations on wage garnishments, disposable earnings are equal to the individual’s earnings after any required government withholdings like federal and state taxes.
Voluntary withholdings, like deductions for retirement accounts and healthcare and life insurance plans, are not part of the mandatory exclusions. You cannot deduct them from your disposable earnings.
As you can see, the rules for calculating wage garnishment in Hawaii aren’t straightforward. Let’s consider an example of how wage garnishment works in Hawaii so that you can see the calculation process.
Example: Ross has a credit card with Tulip Bank with a $2,295 balance. He stopped making payments a few months ago when he had a major car repair bill. Tulip Bank decided to sue him for the outstanding balance and won the case. Now, it wants to garnish Ross’s salary. Ross’s monthly disposable earnings are $4,000. Under Hawaii’s guidelines, he’ll pay ($100 x 5%) + ($200 x 10%) + ($3,700 x 20%), or $765. Under federal guidelines, he would pay 25% of his disposable earnings, or $1,000 per month. The other federal alternative is about $3,130 per month, or $782.50 per week, calculated by $1,000 - (30 x $7.25). In this example, the Hawaii wage garnishment applies because it’s the lesser of the state and federal limitations. Ross will pay $765 for three months until he pays off the debt.
Let’s look at another example to see when the federal guidelines would apply for wage garnishment in Hawaii.
Example: A payday loan company, Yes Payday, is suing Chandler in Hawaii for a $900 loan he didn’t repay. Yes Payday wins its lawsuit, and the court awards a judgment it can use to garnish Chandler’s wages. Chandler has $240 in weekly disposable earnings, or about $960 monthly. Under the Hawaii guidelines, Chandler would pay ($100 x 5%) + ($200 x 10%) + ($660 x 20%), or $157 monthly. Under the federal guidelines, Chandler would pay 25% of his weekly earnings, or $60 weekly. The other federal alternative is $240 - (30 x $7.25 per hour), or $22.50 weekly. When converted into monthly amounts, the federal options are about $240 or $90 monthly. Since the federal amount of $90 monthly is less than the $157 under Hawaii state guidelines, the federal guidelines are appropriate to the case. Chandler will pay $90 monthly to Yes Payday under wage garnishment until he fully satisfies the debt in ten months.
A creditor cannot garnish your wages unless it obtains a monetary judgment against you. To get a judgment, it must sue you in court. If you receive a Court Summons for unpaid debt, you shouldn’t ignore it. You’ll need to take specific steps to protect yourself.
First, review the contents of the Summons. It will include your creditor’s Complaint, which will list its grievances against you. The grievances will consist of the amount you owe and information about your account. If you find any inaccuracies, note them on your account statement.
Your next step is to file an Answer. An Answer is your formal response to the court and your creditor. Filing an Answer ensures that your creditor can’t ask the judge to grant a default judgment against you. Instead, the judge must review your defense before deciding on the outcome of your case.
Next, you’ll want to resolve the debt before your court date. You can either repay the debt entirely or attempt to settle it.
Paying your debt off before your court date stops the lawsuit in its tracks. Your creditor must drop its case since there’s nothing to sue you for. There will be no judgment against you; you won’t need to worry about wage garnishment.
However, a settlement might be the better option if you don’t have enough money to pay off your debt.
In a settlement, you offer the creditor a portion of the obligation in a lump-sum payment. If the creditor accepts your offer and signs an agreement that releases you from the remainder of the debt, it must drop the lawsuit against you.
To learn more about how to settle your debt in Hawaii, check out this video:
SoloSettle, powered by SoloSuit, is a tech-based approach to debt settlement. Our software helps you send and receive settlement offers until you reach an agreement with the collector. Once an agreement is reached, we’ll help you manage the settlement documentation and transfer your payment to the creditor or debt collector, helping you keep your financial information private and secure.
If you think your wages are being wrongfully garnished in Hawaii, you can file a motion to dissolve or modify the garnishment, according to HI Rev Stat § 652-1.5(f). If the court determines there are any issues with the current garnishment, it will be dissolved. If, however, the court rules that the creditor’s claim is valid, the garnishment order will remain in effect.
A wage garnishment can severely dent your monthly income, making it hard to afford your other obligations, like rent and groceries. You can avoid wage garnishment by resolving your debt before your court date. If you no longer owe the debt, there is no basis for a case against you.
SoloSuit makes it easy to fight debt collectors.
You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.
SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.
Here's a list of guides for other states.
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