Colorado Wage Garnishment Order: Definition & Response Guide

More than a million Americans face wage garnishments each year for unpaid debts, taxes, or child support, according to the IRS and U.S. Department of Labor. For Colorado residents, receiving a wage garnishment order can feel overwhelming. It can reduce take-home pay, disrupt financial stability, and create severe stress for individuals and families trying to make ends meet.

A Colorado wage garnishment order is a legal action that allows part of your paycheck to be withheld and sent directly to a creditor, government agency, or court to pay an existing debt. This process can occur because of overdue state or federal taxes, unpaid child support, or a court judgment from a consumer credit transaction. While wage garnishment might seem final, it is governed by Colorado and federal laws that outline strict limits and essential worker protections. Understanding those laws can help you keep control of your finances even when money is being taken from your wages.

This guide explains how wage garnishment works in Colorado, how it differs from federal wage levies, and the steps you can take to respond effectively. It also outlines your rights, possible exemptions, and strategies for stopping or preventing future garnishments. By learning how these laws apply to your situation, you can make informed decisions and move toward resolving your debt responsibly.

Understanding the Colorado Wage Garnishment Order

Receiving a Colorado wage garnishment order can be unsettling, but understanding how it works is the first step toward regaining control. Both state and federal regulations govern how much of a person’s paycheck can be withheld, which debts qualify for garnishment, and how employers must respond once they receive a court or agency order.

Definition and Legal Background

A Colorado wage garnishment order requires an employer to withhold a portion of an employee’s wages and send it to a creditor or government agency. This process allows for collecting unpaid debts such as overdue taxes, child support, or unpaid judgments. The order is enforceable under Colorado and federal laws, ensuring compliance with strict limits on the amount that can be deducted from a worker’s income.

In Colorado, garnishments are typically authorized under Colorado Revised Statutes Title 13, Article 54, which outlines how earnings can be withheld to satisfy a court judgment or tax obligation. These orders can come from different sources, including the Colorado Department of Revenue, a federal agency such as the IRS, or a district court handling civil debts. While the procedures differ, all garnishment forms share a common goal: collecting unpaid financial obligations through the employee’s wages.

Key Terms Explained

Understanding a few key terms helps clarify how garnishment operates under Colorado and federal law:

Disposable Earnings: This refers to the money left after legally required deductions such as federal and state income taxes, Social Security, and health insurance premiums. Garnishment limits are based on this remaining amount, not on gross pay.
Judgment Creditor and Judgment Debtor: The creditor is the party or agency owed money, while the debtor is the individual whose wages are garnished. Colorado courts must issue a court order confirming the debt before most garnishments begin.
Court Order: A valid court judgment is usually required for consumer debts and other obligations. However, certain debts, such as unpaid taxes or child support, may be collected without a separate court proceeding because federal or state laws already authorize direct enforcement.

Colorado vs. Federal Law on Garnishment Limits

Both state and federal law set limits to protect employees from excessive wage deductions. Under Colorado law, no more than 25% of an individual’s disposable earnings can generally be garnished. Federal law, through the Consumer Credit Protection Act (CCPA), also ensures that employees retain enough income to meet basic living needs.

Federal rules provide that garnishment cannot reduce a worker’s income below 30 times the federal minimum wage for each pay period. Colorado’s minimum wage is typically higher than the federal rate, and when state and federal standards differ, the rule that provides greater protection to the employee applies.

For example, if a person earns close to the Colorado minimum wage, the amount eligible for garnishment may be significantly lower than for someone earning a higher salary. These limits ensure that a worker’s essential expenses—rent, utilities, and food—can still be covered even while a portion of wages is withheld for debt repayment.

Common Reasons for a Wage Garnishment in Colorado

A Colorado wage garnishment order usually stems from specific unpaid obligations or legal judgments. Understanding the reason behind your garnishment can help determine which agency is involved, what rules apply, and how to respond appropriately. The most frequent causes include unpaid taxes, child support arrears, and civil court judgments.

Unpaid Taxes and Tax Levies

Unpaid federal or state taxes are among Colorado's most common reasons for wage garnishment. When taxpayers fail to pay or ignore official notices, the Colorado Department of Revenue (CDOR) or the Internal Revenue Service (IRS) can begin collecting through wage levy procedures.

The IRS issues Form 668-W, a legal document that authorizes an employer to withhold a portion of an employee’s wages. This amount is applied directly to the taxpayer’s outstanding balance, including penalties and interest. The levy continues until the debt is completely satisfied or an approved payment plan is established.
The CDOR follows a similar process by mailing a “Notice of Intent to Issue Tax Levy.” This notice allows taxpayers to resolve the balance before wage garnishment begins. If no payment or response is made, the department instructs the employer to withhold funds from future paychecks.
These garnishments remain active until the full balance is cleared. Even after deductions begin, interest continues to accrue on unpaid portions, increasing the total owed over time.

Unpaid Child Support and Family Obligations

Federal and state law aggressively enforces court-ordered child support and spousal maintenance obligations. Employers must prioritize these deductions over other debts to ensure dependents receive necessary support.

For overdue child support, the garnishment percentage can exceed Colorado’s standard 25% limit. Depending on the situation, up to 50–65% of an employee’s disposable earnings may be withheld each pay period. These higher percentages reflect federal rules that prioritize family support obligations.
The garnishment continues until all arrears are paid in full or until the court modifies the order. Courts may also adjust the percentage if the debtor demonstrates financial hardship or significant changes in income.

Court Judgments and Consumer Debts

Creditors who win a court judgment against a debtor can request a wage garnishment order to recover the amount owed. This commonly applies to consumer credit transactions, medical bills, and other unsecured debts.

Before garnishment can begin, the judgment creditor must secure a valid court ruling confirming that the debt is legitimate. This ruling authorizes wage deductions to collect the balance through the debtor’s employer.
Once an employer receives the court order, they must withhold a specified amount from each pay period and remit it to the creditor. This process continues until the balance is fully paid or the court issues a release of garnishment.
Debtors can file an objection if they believe the amount or process is inaccurate. Filing an objection temporarily pauses collection until the court reviews and resolves the dispute.

Overdue State or Local Taxes

Beyond income taxes, state or local taxes may also trigger wage garnishment actions in Colorado.

County treasurers or municipal authorities can request deductions from a person’s paycheck to recover unpaid property taxes or other assessed fees. These garnishments follow the same general procedures as state collections, including formal notice and response periods.
Once established, local tax garnishments remain in place until the total amount owed is paid or a payment plan is approved. These actions are legally binding and must comply with the same limitations and protections outlined in Colorado law.

What Happens After You Receive a Wage Garnishment Order

Once a Colorado wage garnishment order is issued, the process moves quickly and leaves little room for delay. Understanding what happens next helps you prepare, respond correctly, and protect as much of your income as possible. During this process, employers, employees, and creditors have specific legal responsibilities under Colorado and federal law.

Employer’s Legal Responsibilities

Employers play a crucial role in enforcing wage garnishment orders. They must follow precise procedures to ensure compliance with state and federal requirements.

After receiving the order, the employer must legally withhold funds from the employee’s next available pay period. The withheld amount is calculated according to the limits stated in the order and sent directly to the appropriate agency or judgment creditor.
Employers must maintain accurate records of all garnishment transactions. These records include details of the amounts deducted, dates of payment, and the remaining balance. Failure to comply with the order may lead to legal penalties or financial liability for the employer.
Employers are prohibited from retaliating against or terminating employees because of a single garnishment. This protection under federal law ensures workers are not punished for circumstances beyond their control.

How Garnishment Affects Your Paycheck

Wage garnishment directly impacts how much money you receive in each paycheck. The deduction is applied before you receive your take-home pay.

The amount withheld is based on your disposable earnings, which means your income after mandatory deductions such as federal and state taxes, Social Security, and health insurance contributions. The calculation never uses your gross pay.
Some earnings are exempt from garnishment. For example, under federal law, a portion of wages equal to or less than 30 times the federal minimum wage per week must remain untouched. This ensures that employees still retain enough income to cover essential living expenses.
If multiple garnishment orders exist, priority is given to specific debts such as child support and unpaid taxes. Employers must follow priority rules when dividing deductions across different creditors.

Notice and Rights of the Debtor

Employees have the right to be informed and to challenge incorrect information.

Before deductions begin, you will receive a written notice describing the debt, the amount owed, and your right to file an objection. This notice also identifies the creditor or agency responsible for the garnishment and the procedure for requesting a hearing.
Filing an objection allows you to dispute errors, request exemption claims, or demonstrate financial hardship. The court or agency may pause or reduce the garnishment amount if approved.
Always respond within the required timeframe indicated in the notice. Ignoring it can result in continued deductions and additional collection actions, even if the amount is incorrect.

How to Respond to a Colorado Wage Garnishment Order

Receiving a Colorado wage garnishment order can be intimidating, but prompt action can help limit the financial impact and protect your rights. Whether the garnishment comes from the IRS, the Colorado Department of Revenue, or a private creditor, following a clear response plan can significantly change how the process unfolds. These steps explain how to effectively review, dispute, or resolve your garnishment.

Step 1 – Verify the Details in the Notice

Before doing anything else, carefully review all documents related to the garnishment. Errors are common, and verifying the information helps ensure accurate deductions.

Check your name, Social Security number, and employer information. Mistakes in identifying information can result in wrongful garnishment or incorrect amounts being taken from your paycheck.
Review the total amount owed, including any fees, penalties, or interest. Confirm that payments have already been appropriately credited to your account.
Ensure that the agency or department listed on the notice—whether the IRS, CDOR, or a court—is legitimate. You can contact the issuing office directly using the phone number or website provided in the official correspondence.

Step 2 – File an Objection if Applicable

If you believe the garnishment is incorrect or unfair, you may have the right to file an objection or request a hearing.

In Colorado, objections must typically be filed with the court or agency that issued the order. This must be done promptly, usually within 10 to 14 days of receiving the notice.
Use the appropriate form the court or department provided, explaining why the garnishment is inaccurate or causes financial hardship. Include any documentation supporting your claim, such as proof of payments or medical expenses.
Once the objection is filed, the garnishment may be temporarily paused until a judge or agency official reviews the evidence and decides.

Step 3 – Contact the Creditor or Agency

Open communication can often lead to faster resolution and fewer complications.

Contact the creditor or government department listed on the notice immediately. Discussing your situation directly may help you establish a new payment arrangement or clarify errors without needing a hearing.
When dealing with the IRS or CDOR, ask about available programs such as payment plans or hardship status that could reduce or delay garnishment.
Always document conversations, noting dates, names, and what was agreed upon. Keeping written records protects you if future disputes arise about what was said or promised.

Step 4 – Establish a Payment Plan or Hardship Arrangement

Setting up a payment plan or requesting hardship relief can help stop or reduce ongoing wage deductions.

A payment plan allows you to pay the balance owed in smaller monthly installments while remaining in compliance with tax or court requirements. This option may also prevent new collection actions.
You can request a hardship determination if you cannot afford any payments due to essential expenses like rent, utilities, or health insurance. You may need to complete financial disclosure forms showing your income, expenses, and dependents.
When approved, hardship relief may pause the garnishment or lower the deduction amount temporarily until your financial situation improves.

Step 5 – Seek Legal or Financial Guidance

Professional assistance can help you navigate the complexities of garnishment laws.

Consider consulting a tax professional, attorney, or financial counselor familiar with Colorado law. These experts can guide you through filing objections, completing required forms, or negotiating with creditors.
Legal aid organizations and nonprofit credit counseling services often provide free or low-cost advice to help debtors manage garnishment issues responsibly.
Even if you can handle the process yourself, professional guidance ensures that your rights are protected and that critical deadlines are met.

Exemptions, Limits, and Protections Under Colorado Law

Even though a Colorado wage garnishment order allows creditors or government agencies to collect part of an employee’s wages, state and federal laws impose essential restrictions. These exemptions and limits ensure that individuals can still meet critical living needs while satisfying their debts. Knowing what income is protected and how to determine your exemptions can help you safeguard more of your individual earnings.

Income Exempt from Garnishment

Certain types of income are legally protected from garnishment under federal and Colorado law. These protections ensure that people relying on vital benefits are not left without basic financial support.

Social Security and Federal Benefits: Social Security payments, veterans’, and other federal benefits are generally exempt from garnishment. However, exceptions exist for obligations like unpaid taxes, child support, or federal student loans. When in doubt, verify your income type is protected before any deductions occur.
Retirement and Compensation Funds: Pension payments, workers’ compensation, and unemployment benefits are typically exempt from wage garnishment. These income sources serve as critical safety nets, and only specific debts authorized by law can access them.
Bank Accounts Containing Protected Funds: If your bank accounts include both protected and non-protected funds, creditors may attempt to collect from the account. In such cases, you can request a review to separate exempt funds from garnishable income, preventing wrongful withdrawals.

Colorado’s Garnishment Limits

Colorado sets apparent limitations to prevent creditors from taking too large a share of your wages.

The maximum amount that can be garnished is the lesser of 25% of disposable earnings or the portion exceeding thirty times the federal minimum wage per week. These limits ensure that a certain income remains protected for essential living costs.
When multiple garnishments exist, priority is given to obligations such as child support and unpaid taxes. Other creditors must wait until those higher-priority debts are resolved before beginning collection.
Courts may use the standard deduction and income information to determine how much of your earnings can be withheld safely without violating federal law.

Special Protections for Low-Income Earners

Colorado and federal rules provide stronger protection for workers earning near the minimum wage.

If an employee’s take-home pay falls below the income threshold equal to thirty times the federal minimum wage per pay period, the earnings are fully exempt from garnishment. This ensures workers retain enough to cover housing, food, and basic expenses.
Individuals can request a court review if they believe their current deductions violate these limits. Submitting income records, pay stubs, and proof of expenses helps the court verify eligibility for reduced or canceled garnishments.

Resolution and Prevention Strategies

Resolving a Colorado wage garnishment order takes proactive communication and consistent follow-through. The sooner you act, the more control you maintain over handling the debt. These strategies help you address the issue, work with creditors, and prevent future wage garnishments.

Setting Up or Modifying a Payment Plan

Payment plans are among the most effective ways to stop wage deductions and regain financial stability.

The Colorado Department of Revenue and the federal government offer structured plans that let taxpayers pay debts in affordable monthly installments. These programs are often available for state, local, and federal tax obligations.
To apply, submit a request for an installment agreement through the agency’s website or by mail. You may need to provide income statements, expense details, and recent account information. Once approved, the garnishment usually pauses as long as you stay current on payments.
If your financial situation changes, contact the agency immediately to modify your plan. Ignoring a missed payment can cause the garnishment to restart or expand to new forms of income.

Filing for Economic Hardship Relief

When a garnishment makes it impossible to cover basic living expenses, you can request hardship relief.

The IRS and CDOR allow taxpayers to demonstrate financial hardship through specific forms and income documentation. This relief may temporarily reduce or suspend collections.
To qualify, show that the garnishment prevents you from meeting essential obligations such as rent, food, transportation, and medical care. Supporting records like pay stubs, bank statements, or bills are required for review.
Once approved, the agency will adjust your collection amount to reflect your current financial capacity. Re-evaluation occurs periodically to confirm continued eligibility.

Negotiating Directly with Creditors

Some debts arise from court judgments or private creditors rather than tax authorities. Negotiating directly with them can lead to faster solutions.

Creditors may agree to settle for a reduced balance or accept modified terms, especially if the alternative is prolonged wage garnishment. Under Colorado law, written agreements protect both sides and document the new repayment terms.
If you are married, it may be helpful for your spouse to participate in negotiations, particularly when joint debts are involved. This ensures both parties understand how the new arrangement affects shared finances.
Always keep records of all communications, payments, and signed documents. These materials serve as proof of compliance if disputes arise later.

Maintaining Financial Compliance Going Forward

Preventing future garnishments requires long-term financial awareness and consistent filing habits.

File all required tax returns on time and promptly respond to any notice from the IRS or state agencies. Staying compliant prevents debts from escalating into enforced collection actions.
Regularly monitor your accounts and credit reports to identify potential collection risks early. Paying debts before they reach court helps maintain better financial stability.
For example, setting aside a portion of each paycheck in an emergency savings fund can help you manage unexpected taxes or other debts without risking another garnishment.

Frequently Asked Questions (FAQ)

How much of my wages can be garnished in Colorado?

Most garnishments in Colorado are limited to the lesser of 25% of your disposable wages or the amount exceeding thirty times the federal minimum wage per pay period. However, higher percentages may apply for child support or unpaid taxes. Colorado courts use income details and the standard deduction to calculate how much can be legally withheld while ensuring you retain enough income for basic living expenses.

Can I stop a wage garnishment once it begins?

You can stop or reduce garnishment by setting up a payment plan, requesting hardship relief, or paying the full amount owed. Filing an objection in court may also pause deductions temporarily while your case is reviewed. Acting quickly and communicating with the creditor or agency increases your chances of finding a workable resolution before further enforcement occurs.

Are Social Security or other federal benefits protected from garnishment?

Most federal benefits, such as Social Security, veterans’ compensation, and certain retirement payments, are exempt from ordinary wage garnishment. However, exceptions apply for federal tax debts, unpaid child support, or other federal benefits tied to government repayment programs. Always confirm whether your income qualifies for protection before assuming these funds are fully exempt.

What if I have more than one debt being collected?

If you owe multiple debts, only one is typically collected at a time unless one involves child support or unpaid taxes. Priority rules under both federal and Colorado law determine the order of collection. For example, child support and tax debts are processed before credit card or loan judgments. Once the higher-priority garnishment ends, other creditors may begin collection.

What happens if I ignore a garnishment notice or court judgment?

Ignoring a garnishment notice or court judgment can lead to more severe collection actions. Agencies or creditors may seize additional assets, intercept tax refunds, or expand the garnishment to new income sources. Failure to respond also removes your chance to claim exemptions or negotiate payment terms. Taking action early helps protect your income and resolve the issue on manageable terms.