Can they garnish your salary if you have debts with the bank?

In it Peru there are thousands of people who drag debts in financial institutions without having the possibility, or in many cases the willpowerto cancel them. According to SBS, more than 90% of debtors in the banking system are concentrated in mortgage and consumer loans. Faced with a delinquency scenario, many wonder if it is possible to be subject to an embargo or salary deduction in case you have debts with the bank. We tell you here.

Can they garnish your salary?

In the lawyer’s words Ronel Rojas, legally the bank cannot garnish your salary; however, it makes an important point: if you earn less than 5 Procedural Reference Units (URP), that this 2023 is equivalent to S/2,475, you cannot do it, even if the bank is owed a mortgage, vehicle pledge or credit cards.

In communication with La República, labor lawyer Mariana Gonzalez Prada explains that this is mainly because a remuneration, product of a job, has components of a nutritional or family protection nature. “For this reason, there is a limit to the embargo because it serves to support a person or family,” he says.

However, if the person’s salary exceeds the amount of the URP (S/2,475), the bank yes you can discount some sum.

How much of my salary can they garnish?

If you earn more than S/2,475 (5 URP), the bank can seize a third of the surplus. For a better understanding, we will put an example with a mathematical operation. In the event that you earn S/4,000, by subtracting S/2,475, S/1,525 would remain. So, the third part of this remaining amount is S/508. This amount is what a financial institution can deduct from you.

The also professor of Law at the Universidad del Pacífico explains that there are three recognized forms of valid withholding: the first is the law (which involves income tax withholdings and pension contributions). The second is by court order (For example, in food pensions). Meanwhile, the third is through the authorization of the worker, that is, when he decides to discount loans and the like.

Let us remember that, in July 2021, through the judgment of the Plenary session 670-2021 of the Constitutional Courtthe amparo claim filed by a worker against the National bank after this entity withheld and appropriated all of his remunerations, which is prohibited by the Civil Procedure Code, according to article 648.

Fines for discounting 100% of salary

According to the lawyer, in the labor field, the worker, bank and employer can make a salary withholding agreement. “It’s not automatic. The worker always has to authorize it,” manifest.

An employer can only make withholdings on the worker’s compensation in the three cases mentioned (by law, by decision of a judge and by authorization). In the latter—which implies that a worker authorizes his salary to be deducted to pay a debt—, the lawyer points out that it is not possible to garnish 100% of your total payment. “Reasonability must enter into the amount to be withheld,” emphasizes the expert.

Failure to pay full remuneration constitutes a serious infringement in terms of labor relations. The economic sanctions for a company for each worker is 1.57 UIT, which is equivalent to S/7,771. “That is the fine for practicing an illegal discount,” says González Prada.