Frequently Asked Questions by  EMPLOYERS

1. I have received a garnishment from your office.  What is the balance owed?  And, isn't  it true that a garnishment can't exceed 50% of the employee's earnings?
   
   
2. What if the amount of the deduction order exceeds the pay the employee is entitled to during a particular pay period?
   
   
3. My employee told me that it was not necessary to send in his payment; he said he would take care of it. Is that okay?
    
4. My employee is about to go on medical leave.  What do we do about plan payments?

I have received a garnishment from your office.  What is the balance owed?  And, isn't  it true that a garnishment can't exceed 50% of the employee's earnings?

A payroll deduction order issued in a Chapter 13 case is not a garnishment.  It is simply a tool authorized by Congress, at 11 U.S.C. Section 1325(c), to assist debtors in carrying out their Chapter 13 repayment plans.  An employer is not being made a party to any lawsuit; he need not consult an attorney; and he need not file any papers with a Court;  he only needs to comply with the order by making regular payroll deductions and forwarding those funds to the Trustee.  There is no "balance" for the employer to be concerned with; the order remains in effect until it is revoked by subsequent Bankruptcy Court order.

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What if the amount of the deduction order exceeds the pay the employee is entitled to during a particular pay period?

You are not required to remit any more than the debtor is entitled to be paid.  However, all the funds should be remitted to the Trustee in this event.

My employee told me that it was not necessary to send in his payment; he said he would take care of it.  Is that okay?

No.  Unless the deduction order has been revoked by the Bankruptcy Court, the plan payment is to be made by payroll deduction.

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My employee is about to go on medical leave.  What do we do about plan payments?

As long as the debtor is not entitled to be paid by you, you have no obligations under the deduction order.  However, when the employee returns to work, you should continue to honor the deduction order by resuming payments to the Trustee.

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Revised: October 03, 2007 .