ARE YOUR WAGES BEING GARNISHED?

If you have been sued and have a judgment against you, it is likely that from time to time the judgment holder will try to garnish your wages.  The way it works is as follows:

At least once a year the creditor, or their attorney, is required to send you a form by which you can tell the judgment holder that your wages cannot be garnished.

The main reasons your wages cannot be garnished are that you presently receive (or within the prior six months have received) "government assistance based on need.  The most common forms of government assistance based on need are fuel assistance, Medical Assistance, or MinesotaCare. (Other things qualify, such as MFIP).  If you have qualify, you should return the form to the creditor which will entirely protect you from being garnished.

If you don't return the form, the creditor (or, usually, their attorney) sends a form to your employer that instructs your employer to take a portion of your wages.

The amount that can be taken by the creditor is the smaller of:

one-fourth of your "net"wages; or
the amount over $290 per week (40 times the federal minimum wage).

In this context, :"net wages" means:  total wages minus "amounts required by law to be withheld".  In English, that means wages minus taxes.

As an example, if you make $12 per hour for 40 hours per week, and if your taxes are 20% (FICA + federal + state), the math works out as follows:

$480.00 gross
    96.00 taxes
384.00   net

1/4 of $384 = $96
amount over $290 = $94.00

So, the creditor could take $94 from this paycheck.

A garnishment lasts for 70 days (10 weeks) from the date it is served on your employer.  The employer is required to set aside the garnished amount for 180 days.

The bankruptcy angle is this:  If, when you file bankruptcy, the creditor has received more than $600 within the previous 90 days, that amount is ordinary a preference, and can be recovered from the creditor.

If you are being garnished, feel free to contact my office at:  320-252-4473.

New Means test numbers

Back in 2005 Congress inserted a "means test" into the bankruptcy code.  
What this means is that when you file bankruptcy, we must add up your income from all sources (except Social Security payments and, arguably, unemployment compensation benefits) for the six months before the month in which your case is filed.  

We then multiply that number by two [really, that's how the formula works!] and compare that result to a chart which shows the "median income" for a household of your size in Minnesota.

The significance of this is that if your household income is over the applicable number, and if you file a chapter 13 case, you need to be in a five year plan; if your household income is under the applicable number, you can file a plan of as short as three years.  Additionally, if your income is over the means tests number, you must complete an additional "budget" based on IRS exemption numbers.

The Census Bureau periodically updates the number, and the new numbers have just been announced.

For cases filed April 1 2017, and for about six months thereafter, the numbers in Minnesota are as follows:

household of one person:  $52,785.00
household of two people  $70,889.00
household of three people:  $85,033.00
household of four people:  $101782.00

If there are more than four people in the household, add $8,400.00 per additional person.

For comparison, if your case was filed in April 2015 the numbers were:

household of one person:  $50,934.00
household of two people  $66,566.00
household of three people:  $81,044.00
household of four people:  $94,807.00