New Jersey Debt Collection Laws: The 10% Garnishment Ceiling and the Medical Debt Ban

No collector can garnish a New Jersey paycheck without first suing you, winning a judgment, and getting a wage execution order from the court. Most New Jersey wage executions begin with a default judgment entered because the summons went unanswered, which makes answering the lawsuit, even with a short written denial, the single most valuable step you can take. Once a creditor does have a judgment, New Jersey turns out to be one of the more protective states in the country, with a garnishment ceiling well below the federal 25% and a new, aggressive medical debt law.

New Jersey's Wage Garnishment Formula: 10% of Gross

New Jersey's wage execution notice, the official form served on debtors in Special Civil Part collection cases, states the formula plainly. The court may order withholding of the least of: 10% of your gross salary, when gross wages equal or exceed $217.50 per week; 25% of your disposable earnings for the week; or the amount by which disposable weekly earnings exceed $217.50. The form then adds the ceiling that does most of the work: in no event shall more than 10% of gross salary be withheld. For nearly every debtor, 10% of gross is the binding number, less than half the federal baseline.

The $217.50 figure is 30 times the federal minimum wage, the federal floor below which nothing may be garnished. If your gross pay is under $217.50 a week, no wage execution issues at all.

Two more protections ride along on the same form. Only one execution against your wages is satisfied at a time; a second judgment creditor waits in line rather than stacking a second deduction. And the employer-protection language is broader than the federal rule: your employer may not discharge, discipline, or discriminate against you because your earnings have been subjected to garnishment.

The statute behind the form sets the same ceiling and names two exceptions to it. N.J.S.A. 2A:17-56(a) provides that the amount specified in a wage execution shall not exceed 10%, "unless the income of such debtor shall exceed 250 % of the poverty level for an individual taking into account the size of the individual's family, in which case the court out of which the execution shall issue may order a larger percentage." Subsection b. lets the State, on wage execution applications it files itself, seek up to 25% of the debtor's gross earnings, provided that after the execution the debtor's income will not fall below 250% of the poverty level for a family that size. So an order above 10% belongs either to a higher-income debtor or to a State claim; a private creditor collecting from a household near the poverty guidelines is held to the 10% figure, and any order above it deserves a lawyer's review.

The Louisa Carman Medical Debt Relief Act

New Jersey passed one of the country's strongest medical debt laws in 2024, named for Louisa Carman. For medical debt, the Act bans wage garnishment outright for patients earning less than 600% of the federal poverty level, a threshold that covered roughly $90,360 for an individual and $187,200 for a family of four at 2024 levels, meaning the ban reaches well into middle-class incomes. It caps interest on medical debt at 3% per year, requires at least a 60-day grace period on late payments under a reasonable payment plan, and bars collection action until 120 days after the first bill and until a reasonable payment plan has been offered. The wage garnishment ban and interest cap took effect July 22, 2025. The Act also blocks most medical debt from appearing on credit reports.

If you are being garnished over a hospital or medical bill in New Jersey, check this law first: for most working households, the garnishment itself is now prohibited.

Bank Accounts and Property Levies

Once wages are deposited, a judgment creditor can pursue the account or other personal property through a levy, and the 10% wage ceiling no longer controls. New Jersey's courts' collection guide explains the practical floor: a Special Civil Part officer cannot levy on personal property at all if the debtor has $1,000 or less in personal property, the amount New Jersey exempts. The same guide lists categories that cannot be taken regardless of amount, including child support, welfare benefits, Social Security, SSI, veterans' benefits, and unemployment benefits. Federal law adds an automatic shield equal to the last two months of directly deposited federal benefits, which the bank must protect without any filing from you.

New Jersey has no large self-executing dollar exemption for ordinary bank balances the way New York does, so a levy on an account holding ordinary wages is a real risk once a judgment exists, and exempt funds need to be identified and claimed quickly after a levy notice.

The Statute of Limitations: 6 Years, With a Caveat

Suits on contract debt in New Jersey, written or oral, including credit cards, carry a six-year limitation period. N.J.S.A. 2A:14-1(a) requires that an action "for recovery upon a contractual claim or liability, express or implied, not under seal" be commenced "within six years next after the cause of any such action shall have accrued." Subsection b. carves out contracts for the sale of goods, which run four years under the UCC at N.J.S.A. 12A:2-725. Our New Jersey statute of limitations guide reports the same 6-year figure.

Revival is governed by N.J.S.A. 2A:14-24, and its two halves point in different directions. On acknowledgments, the section says that in actions on a simple contract "no acknowledgment or promise by words only" is enough to take a case out of the limitation period "unless such acknowledgment or promise shall be made or continued by or in some writing to be signed by the party chargeable thereby." That signed-writing protection is limited by its own terms to an acknowledgment or promise by words only. On payments, the section closes the other way: "Nothing in this section shall take away, lessen or alter the effect of any payment of principal or interest made by any person whatsoever on the obligation in suit." The statute preserves whatever effect a payment carries rather than neutralizing it, so a payment on an old debt is not protected the way an unwritten promise is. The practical rule for consumers follows from that: date an old debt before paying anything on it. A 2025 bill that would have barred revival of time-barred consumer debt entirely, Assembly Bill A5619, died in committee in January 2026, so existing law stands.

Two things are true everywhere regardless: an expired limitation period does not erase a debt, and collectors may still ask you to pay it, but suing or threatening suit on a time-barred debt is flatly prohibited by federal Regulation F.

Repossession in New Jersey

New Jersey follows the standard UCC rule: after default, a secured lender may repossess the collateral without a court order, provided it proceeds without breach of the peace, or it may use the courts. Breaking into a locked garage or continuing over your active objection crosses the line; a car taken quietly from a driveway or street generally does not. We could not verify any New Jersey statute requiring a pre-repossession notice or right-to-cure period for ordinary auto loans, so do not count on a warning. After repossession, the sale must be commercially reasonable, and a lender that fails to follow the disposition rules risks losing its deficiency claim. Servicemembers whose loans predate military service cannot be repossessed without a court order under federal law.

If You Are Being Garnished or Sued in New Jersey

Answer the summons before the deadline; a default judgment forfeits every defense, including the statute of limitations. If a wage execution is running, check the math against the 10% gross ceiling, confirm only one execution is being satisfied, and if the debt is medical, check the Louisa Carman Act's income threshold, because the garnishment may be barred outright. If a bank levy hits, identify exempt funds immediately, especially Social Security and other protected benefits. Do not pay anything on an old debt before dating the 6-year clock. And when judgments have stacked beyond what a budget can absorb, bankruptcy's automatic stay stops wage executions and levies while the case is pending; the guide to stopping wage garnishment walks through the options in order.

Information last verified on 2026-08-12. This article has not yet been reviewed by a licensed lawyer.

Related Resources

• Debt Collection Laws by State
• Statute of Limitations on Debt
• How to Stop Wage Garnishment
• Car Repossession Laws
• New Jersey Statute of Limitations
• New Jersey Bankruptcy

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Last updated: 2026-08-12.

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