If a creditor wins a judgment against you in Vermont over an ordinary consumer debt, such as a credit card, medical bill, or personal loan, Vermont law lets it take only a small slice of your paycheck. Under Vermont's wage-garnishment statute, 12 V.S.A. § 3170, the amount exempt from garnishment for a debt arising out of a consumer credit transaction is the greater of 85% of your weekly disposable earnings or 40 times the federal minimum wage. In plain terms, a consumer-debt creditor can reach at most 15% of your disposable weekly wages, far less than the federal cap. That is one of the most debtor-friendly garnishment rules in the country, and it is the figure that matters most for the typical Vermonter facing a debt-collection judgment.
How Vermont's wage garnishment cap works
To understand the rule, start with the federal baseline. Federal law, the Consumer Credit Protection Act, lets creditors garnish the lesser of 25% of your disposable earnings or the amount by which your weekly disposable earnings exceed 30 times the federal minimum wage. "Disposable earnings" means what is left after legally required deductions like federal and state taxes, Social Security, and Medicare, not after rent, car payments, or other living expenses.
Vermont layers a more protective rule on top of that federal floor. States are free to give debtors more protection than federal law, and Vermont does exactly that for consumer debts. Under 12 V.S.A. § 3170, when the underlying judgment arose from a consumer credit transaction, the protected (exempt) portion of your wages is the greater of:
- 85% of your weekly disposable earnings, or
- 40 times the federal minimum wage (40 x $7.25 = $290 per week as of 2026).
Because the law protects whichever number is larger, lower-wage workers are shielded by the flat $290 floor, while higher earners are protected by the 85% percentage. Either way, no more than 15% of disposable earnings can be garnished on a consumer debt. By contrast, for judgments that did not arise from a consumer credit transaction, Vermont tracks the federal formula: the exempt amount is the greater of 75% of disposable earnings or 30 times the federal minimum wage, leaving up to 25% subject to garnishment.
The federal minimum wage figure ($7.25) has not changed in years, so the $290 floor is currently accurate. Still, confirm the current minimum-wage figure and the exact statutory language with an official source before relying on a specific dollar amount, because these numbers can be updated.
The hardship exemption: the court can protect even more
Vermont goes a step further than a fixed percentage. Under 12 V.S.A. § 3170, a judge may order that a greater amount of your wages be exempt if the court finds that your reasonable weekly living expenses exceed the standard exempt amount. This is a true hardship provision: if garnishment of even 15% would leave you unable to cover rent, utilities, food, and other necessities, you can ask the court to reduce or eliminate the garnishment. Vermont courts use a financial-disclosure process where you list your income and necessary expenses, and the judge weighs whether the standard formula leaves you enough to live on.
This matters because it means the 15% consumer-debt cap is a ceiling, not a guarantee that 15% will actually be taken. Many Vermonters with modest incomes and high housing or medical costs end up with little or no garnishment after the court reviews their expenses.
What income is exempt from garnishment entirely
Beyond the wage formula, certain types of income are protected regardless of the percentage rules, generally because federal or Vermont law shields them at the source. These commonly include:
- Social Security and SSI benefits, which are protected by federal law.
- Veterans' benefits and most other federal benefit payments.
- Unemployment compensation and workers' compensation benefits.
- Public assistance such as Reach Up and other need-based aid.
- Most pension and retirement payments, including those covered by federal law.
- Child support and spousal support you receive.
These exemptions follow the money. If benefit payments are deposited into a bank account and a creditor tries to levy that account, the funds generally remain exempt, but you may have to identify and claim the exemption so the bank or court does not treat the account as ordinary cash. Keeping exempt funds in a separate account from other deposits makes them far easier to protect.