Garnishment

[frustrated51]

Our paperwork didn't go fast enough and filing Ch 13 the end of next week. Both the IRS and a creditor have asked for garnishment on my spouse's paycheck next week. I am in WA State and I thought it was limited to 25% although I suspect the IRS can take more. If the IRS takes more than 25% can the unsecured creditor still take some? Will they leave us all the allowances? My spouse is concerned there won't be much of a paycheck at all. I am a bit more positive about it.

[catleg]

I doubt the other creditor can take any more in addition to the IRS.

Here is a chart of the amount the IRS exempts from levy.

http://www.irs.gov/pub/irs-pdf/p1494.pdf

The amount that gets garnished may be recoverable as a preference based on your bankruptcy filing, but you'll have to ask your lawyer how much paperwork is involved. It may not be worth the bother.

[treehugger1]

The 25% should be a cap other than what might be allowed for taxes, child support, criminal restitution, etc.

In other words, if the IRS gets 60%, then the other creditor gets nothing until the IRS writ is satisfied.

I have heard that the IRS often restricts itself to 25% unless there is some thought the taxpayer might "vanish." On the other hand, the IRS can take up to the amount above the exemptions listed in the table pointed out by catleg.

I got behind on taxes for a couple of years, and my concern related to over 25% garnishment by the IRS led me to work out a very reasonable payment plan. In addition, I now claim 0 exemptions on my W-4's. This serves two purposes. 1) Increases my tax refund that is used to offset my back taxes owed. 2) Reduces the amount other creditors can get under 25% garnishment. Since one cannot easily escape taxes or student loans, I'll keep this approach in order to make sure the maximum amount of money is flowing to these two entities.

[frustrated51]

Thank you. That is what I was thinking. I am just hoping the employer does it right and doesn't give it all to them. Unfortunately, I don't have a lot of faith in them.