Why Filing Bankruptcy Stops Payroll Garnishment: Virginia Law, Virginia Form
I’m surprised a couple times each month by Virginia employers who don’t know that bankruptcy stops payroll garnishment. Some employers think they need to keep on garnishing, until they get an order from a judge saying to stop. But if you read the Garnishee’s Answer Form, it tells you exactly what to do.
(If you don’t have the form handy, please check the link so you can follow along. I’ve inserted the form down below, but it’s too small to read.)
Please Mail Checks or Responses
If you read the form, up at the top, point 4 says, “Please mail checks or responses….” That tells you right there, you can mail a “check” or a “response.” So you don’t have to mail a check. You can mail a response.
Below that, you have ten boxes you can select. The first one is “Enclosed is a check…”
There are 9 Excuses for Not Mailing Checks
After “enclosed is a check,” there are nine other responses. Those nine are your excuses for not mailing a check. Those nine excuses are listed right on the form. They are called responses. Responses you can legally send in instead of checks.
After the “Enclosed is a check” response, look at the nine other boxes. The first one is pretty obvious: “the garnishee holds no money…” If the debtor does not work for you, or bank with you, you don’t have to send in any money. That’s clear.
The second one is slightly different: “The garnishee does not have sufficient information to reasonably identify…” If the garnishment is for John Smith, your company might have eight John Smith’s. If there’s no social security number and the address doesn’t match any of the eight, you’d select that box. (Or if your company only has one John Smith, but there’s no social security number and the address doesn’t match.)
Then there are other boxes for: doesn’t work here anymore; the amount of the garnishment isn’t filled in; not making enough money to be garnished; already being garnished by someone else.
“The judgment debtor has filed a bankruptcy petition”
“Judgment debtor filed bankruptcy” is one of the nine reasons to NOT send checks. Sorry this is so small, but you can see the form full size, here. Or here. dc456
The eighth box is “the judgment debtor has filed a bankruptcy petition…” Like the other boxes, the debtor’s bankruptcy is a legal answer to the garnishment. Filing bankruptcy is a legal excuse for not sending in a check. It’s a response that’s right on the form that asks you to mail “checks or responses.”
So if you get notice that your employee has filed bankruptcy, you don’t need to wonder what to do. Pick up the form. Select the box that says “The judgment debtor has filed a bankruptcy petition.” Mail that response. That’s it; you’ve done what the court asked you to do. Finished. You are supposed to send checks or responses. You’ve sent your response.
You’ve checked the box you are supposed to check and done what you’re supposed to do.
Bankruptcy Stops Payroll Garnishment: Does The Form Seem Too Simple?
Even if you didn’t have the form, you should know (or your lawyer, anyway, should know) that bankruptcy stops payroll garnishment. Bankruptcy Judge Stephen S. Mitchell explained why that is, in 18 pages, in the case of Madge Lebrun. (I was Ms. Lebrun’s lawyer.) If you don’t believe the form, you—or your lawyer—can read, here how Judge Mitchell explained bankruptcy stops payroll garnishment.