Garnishments in a Perfect World - Federal Garnishment Regulation

What would you do if court ordered garnishments were regulated by a single federal law, rather than the 54 different state laws that are in effect currently?  There are actually some groups that have realized the nightmare forced upon employers who must interpret all the state provisions. These groups are actively trying to ease the complex processes by proposing a Uniform Wage Garnishment Law.

Uniform Wage Garnishment Law

The proposal includes 11 provisions:

  1. All states should follow the federal definition of “disposable income” – gross income less deductions required by law.  Some states try to toss in various insurance deductions, union dues, and other deductions not required by law.
  2. Enforce withholding limits on garnishments that are consistent with the federal Consumer Credit Protection Act.
  3. Leave garnishments in effect until they are satisfied in full, just like federal tax levies and child supports are.
  4. Give employers 30 days to respond to garnishment orders.
  5. Require withheld funds be remitted each payday.  Some states currently require employers to hold withheld funds in escrow and remit at some later date.
  6. The CREDITOR should notify the employee about the garnishment – not the employer.
  7. The employer should be required to report to the creditor only one time, at only a single address , about only limited information on an employee (employment status, pay rate, other garnishments, etc), within 30 days of receiving the garnishment order.
  8. Garnishment orders should be sent to an employer’s legal agent; this provision is in an effort to reduce fraudulent documents that look official from being sent directly to employers and/or payroll.
  9. Allow for multiple garnishments to be withheld at the same time, with amounts distributed equally among creditors.  Some states currently disallow concurrent garnishments, and therefore place fairly short time limits on garnishments so that employers constantly have to stop some and start new ones in a merry-go-round effect.
  10. Allow employers to charge a $10 administrative fee to the creditor for each payment to help cover collection costs.
  11. Penalties should be limited to the amount not withheld and remitted according to the order.

These suggested provisions were collected from existing state laws, and deemed to work well in the states where they are already in effect.  It will be up for much debate, and the final legislation may not be exactly according to the points outlined above. Perhaps some day, the administration of garnishments will fall under a uniform federal law rather than the myriad of state laws that invite the confusion we have today!

Do you have any proposals for garnishment regulations?

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Senior Analyst Trish Grant, TUTCO, Inc.

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