The combination of a downturn in the economy and an upturn in wage attachments has created unexpected complications. It did not take a crystal ball to predict that employee garnishments would increase when employees' jobs and pay were negatively affected by the economy. But employers did not foresee how creditors and agencies would actually complicate the process by trying to "help out" debtors.

A number of employers have reported that attorneys are volunteering to help reduce the withholding percentage or change garnishments to a fixed amount. Federal agencies and student guaranty agencies are reducing the percentage to withhold for student loans, and even the IRS has reduced the number of levies it could normally issue.

On its face this seems like good news, at least for the employee debtor. Less money being withheld for a garnishment! But this can be a case of a good deed run amok. In a poor economy garnishments are like rabbits-they multiply. Additional garnishments for the same employee can cause complications for the garnishment department. Garnishment rates without judicial support can create even more complex problems.

REAL LIFE QUESTIONS

A good example of this situation was brought to my attention by an employer administering a creditor garnishment in Utah. Utah limits deductions fro garnishment to 120 days. Jack's employer had been withholding for a typical garnishment at the ordered rate of 25% of disposable earnings. A month after deductions began, the attorney for the creditor sent Jack's employer a letter saying that he and Jack had entered into an agreement to reduce the withholding limit from 25% to $50 a week. On the surface this looks very helpful to the employee, but this agreement between the attorney and the debtor is not what the document approved by the court says. This creates questions that may be answered by your legal representative, including:

• Is this agreement now considered a voluntary wage assignement, or is it still a garnishment?
• Does this agreement expire after the 120 days from the beginning of the garnishment or does the attorney expect it to continue?
• If this deduction is now an agreement, do the Consumer Credit Protection Act's (CCPA) Title III limits apply? (Title III protects employees by limiting the amount of earnings that may be garnished in any pay period to the lesser of 25% of disposable earnings or the amount by which disposable earnings are greater than 30 times the federal minimum hourly wage set forth in the Fair Labor Standards Act. This limit applies regardless of how many garnishment orders an employer receives for an employee.)
• What happens if a second creditor serves a garnishment against Jack's nonexempt earnings during the 120-day period; does the $50 agreement have priority?
• Does the $50 reduce the state's 25% withholding limit for garnishment?
• Does Utah allow more than one creditor garnishment to be deducted at the same time?

In another situation, an employee in California had a creditor garnishment. The Sheriff's office administering the garnishment sent notice to reduce the percentage of withholding from 25% to 15%. A second garnishment had been served prior to this reduction. Does this mean that, following the rules of aggregation, 10% must be deducted for garnishment number two? According to the issuing sheriff's office, only one garnishment at a time could be deducted.

A Louisiana case involved an attorney who was talked into reducing the garnishment from 25% to 10%. When the change was sent to the employer, the employer contacted the attorney to explain that a second garnishment was in line. Louisiana follows the 25% rule of aggregation for creditor garnishments, so the employer would have to deduct 15% for the second garnishment. When the attorney for the first garnishment found out that another creditor was going to benefit from their "kindness," they rescinded the agreement. They could do this because nothing had been filed with or approved by the court.

HARDSHIP RULES

Some states do have rules that allow a debtor to file for hardship and receive a court-approved reduction to the amount that must be deducted. Those types of changes are controlled by the court and follow a formal process. they do not leave as many questions as do the unofficial agreements.

How can you avoid the complications of unintedned consequences? Accept only what is required by law.

When a creditor wants to informally change the requirements of the garnishment, ask for a release of the garnishment currently being handled and tell the attorney that any informal agreement they make with the employee cannot involve a payroll deduction without approval by the court. this may seem unkind, but your first obligation is to protect your employer by following legal requirements.