Garnishments and Bankruptcy

Hi All,

I need your help again. Does anyone process garnishments? I've lost my right hand gal and need to refresh myself on certain procedures.

We have an employee that we received a garnishment on. He's panicked and went to see a lawyer to declare bankruptcy and wanted me to not withold on his say so. I told him that we're legally obligated to honor the garnishment until we receive his bankruptcy papers. Well, what I received today is a fax he forwarded to me from his lawyer stating that he filed and the case number. I have'nt received anything from the court or an official document.

In my very old garnishment book it states "Until the employer is notified by the bankruptcy court of the trustree to do otherwise, the employer should continue to withhold." I don't believe that a fax stating when the meeting of the creditors is to take place is sufficient. It's a print out from a databse stating the meeting isnt until May 7th.



  • 6 Comments sorted by Votes Date Added
  • I agree with your very old book. We are seeing more and more garnishments. . the worst is actually from a bankruptcy. .poor guy does not even take home $100.00 a week
  • I also agree with your old book. For the garnishment you received, is it a court-ordered garnishment or a debt collection? For most debt or third-party collection notices, there is a caveat in there that states the employee has the right to dispute the garnishment, and in that event, you as the employer do not withholding anything until that protest is cleared.

    Hope that helps! If it's a court-ordered garnishment, you've got to process it.
  • Thanks much. I told the employee that what I received wasn't sufficient for me to stop withholding his garnishment. He understood.

    I appreciate the help I receive from this forum. You guys are great!
  • Beth, you ar heading down the right path. If you have a court ordered deduction you have to continue deducting until you get something official from the court stating you can stop. The document should have the case and docket number on it that pertains to the employee.

    To my knowledge the only garnishment that is exempt from the credit protection act is an IRS garnishment, but all others are limited to 50% of the employees disposable income. In certain child support issues the deduction can go up to 60%.

    I have had to make many calls to the courts and support agencies to have the deduction they were asking for reduced since they were asking for to much of the employees disposable income.

    I hope this helped you some.
  • Sonny,

    May be a good idea to look at the credit protection info. I beleive bankruptcy still falls under the 50% of disposable income limit. May help the relationship with the employee if you can put somemore money in his pocket.
  • Thanks. Our attorneys were in the loop. We actually fired him this am :( so guess it is a non issue anyway.. .
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