What is a Wage Assignment?

A wage assignment refers to a forced payment of a financial obligation via automatic withholding from an employee's pay.

How Does a Wage Assignment Work?

Courts can subject individuals who become delinquent in their obligations to wage assignments. In most cases, wage assignments are ordered when a person is delinquent on child support, spousal support, taxes or loans. If the obligor shows a history of nonpayment, a wage assignment can be used to automatically subtract money owed from his or her payroll without his or her consent. For example, if an individual becomes delinquent on $100 monthly loan payments, a wage assignment automatically deducts the $100 from the person's weekly or monthly paycheck and sends it to the lender.

Why Does a Wage Assignment Matter?

Wage assignments are frequently ordered in connection with delinquent child support payments and merchant credit balances. Though unlawful in certain U.S. states, wage assignments can be a useful, proactive method for recouping long-term unpaid debts.

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Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers.

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