 | Levi Goossen is an attorney who has been in practice since 1962. He got the idea for NDF Co. in 1974 while serving as a county probate judge. He realized that the county attorney was spending a lot of time producing the same documents over and over. This led to the creation of numerous paper form sets with multiple parts serving different functions, but each containing the same information by carbon transfer. The company produces more than 25 different form sets used by attorneys, district courts, county attorneys, municipal courts, police departments and collection agencies. When Kansas garnishment laws changed to make wage garnishments continuous, NDF Co. developed a form for creditors to use that included instructions and a worksheet for employers to use to calculate the allocations. Realizing what a time-consuming task those calculations would be, Levi worked with a computer programmer to develop software that would make the calculations automatically and accurately, as well as print out monthly answers and distribution statements. Check out the company's web site at www.ndfco.com for more information, write to NDF Co., PO Box 725, Newton KS 67114-0725, or call (316) 283-3628. |
Legal
2002-08-01 11:37:00
Income withholding order vs. earning’s garnishment
Levi Goossen
Question: What is the difference between an income withholding order, an earnings garnishment for support and an earnings garnishment for general judgments?Answer: An income withholding order is used to collect ongoing child or spousal support. There is no judgment amount given and no termination date. It will require you to withhold from 50% to 65% of an employee's wages. Bankruptcy is not a stay on an income withholding order, nor are they suspended for sick leave. Income withholding orders are continuous and take priority over all continuous earnings garnishments.Earnings garnishments are used to collect judgments. An earnings garnishment for support is used to collect a judgment amount of past due child or spousal support. The required withholding amount will also be 50%-65%. An earnings garnishments for general judgments is used to collect judgment debts of all kinds, usually resulting from small claims or limited action proceedings. The amount withheld for a general judgment garnishment is generally 25% of disposable income, subject to the Federal Consumer Protection Act limitations. Bankruptcy acts as a stay on all types of garnishments, and they may be suspended if a sick leave affidavit is filed. General judgment garnishments are considered to be of a lower class than garnishments for support because the amount exempted from garnishment is higher.The difficulty comes allocating the different withholdings between creditors. Income withholding orders always take priority, so that amount can be removed from disposable earnings for purposes of calculating garnishment deductions. And if all garnishments had the same exemption, it would be easy to simply split the withholdings equally between the creditors each month. Unfortunately, that is usually not the case.The highest class garnishment controls the amount to be withheld. Although there is no priority between garnishments, and all are concurrent and presumably share equally, the employer cannot give money to creditors subject to higher exemptions that would have prohibited withholding that amount. So, even though you may be withholding 50% of an employee's wages because of a garnishment for support, a lower class creditor is not entitled to share in all of it. You can't just divide the money equally between all the classes of creditors.A. This means that the employer must first allocate to the higher class support order creditor the difference between the amount taken by his garnishment, applying the lower exemption, and the amount that would have been taken if he had been a lower class creditor and therefore subject to the higher general judgment exemption.B. Then, because the higher class garnishments are also concurrent with the lower class garnishments, the employer must calculate the division of the remainder between both the support order creditor and the general judgment creditor or creditors, applying the higher general judgment exemption of 75%.C. The support order creditor is paid the total amount allocated to him by A and B above. The general judgment creditor gets only what is allocated to him by B.This sounds complicated because it is. It is important that employers make these calculations carefully, as failure to withhold properly could lead to a judgment against your company.
