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RECENT CHANGES IN LAWS RELATED TO GARNISHMENT OF WAGES
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RE: Wages of John Smith (Employee)
TO: Widget’s Inc. (Employer)
Beginning July 1, 2001, the procedure for wage garnishments in Montana changed. This is due to legislation passed in the 2000-2001 session. The changes are significant and the purpose of this memorandum is to acquaint you with those changes, and to provide you with some guidance in following the new statutes. This letter is not intended in any way to be construed as legal advice and it is our strongest advice that you review the appropriate statutes with your own legal counsel.
In the past you may have been served with multiple garnishments on the same individuals, and alternated between those garnishments each pay period. Also, if the garnishment was to be used on more than one pay period, the levying officer would have to levy it anew each pay period. This process, and the length of the garnishment, are the main changes outlined below.
The following two subsections are entirely new:
MCA 25-13-402 (5)
(a) A levy upon the earnings of a judgment debtor continues in effect for 120 days or until the judgment is satisfied, whichever occurs first. The levy applies to earnings due on or after the date of service through the expiration of the writ.
(b) The sheriff or levying officer shall clearly mark the expiration date upon all served copies of the writ and notice.
(c) Except as provided in subsection (6), multiple levies served under this subsection (5) have priority according to the date and time of service upon the employer.
MCA 25-13-402 (6) Nothing in this section is intended to supersede any state or federal laws regarding priority that must be given to certain levies and executions.
In practical terms this means that you will honor one levy, the first levy served, per employee, for the life of the writ, (120 days), or until the judgment is paid in full. If another levy is served to you regarding the same employee, you will not honor it until the first levy is expired, or paid. The expiration date for each levy is to be clearly marked for your convenience.
EXAMPLE
A Notice of Levy is served on you for John Smith on July 1 2001.(levy "a") The expiration date is for 10-28-2001. You are required to garnish Mr. Smiths pay each and every payroll until 10-28-2001, unless it is paid in full sooner. On August 1, 2001, a separate Notice of Levy is served on you for Mr. Smith.(levy "b") The expiration date on this levy is 11-28-2001. You would not honor this levy "b" until levy "a" has expired, or is paid in full. Assuming levy "a" was not paid in full you would honor levy "b" beginning 10-29-2001 and each and every subsequent payroll through 11-28-2001.
It is important for you to remember that the levies are to be honored strictly in terms of time of service. If one is served on you at 10 am, and another at 2 pm, the earlier levy has precedence for the entire 120 day period.
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-SAMPLE CALCULATIONS-
HOW TO CALCULATE A WAGE GARNISHMENT FOR A BI-WEEKLY PAYROLL
FIRST STEP - FOR EACH & EVERY PAYROLL CALCULATE THE FOLLOWING EXEMPTION FORMULA:
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1.
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500.00
50.00
25.00
25.00
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TOTAL EARNINGS
MINUS FED TAX
MINUS STATE TAX
MINUS FICA
MINUS OTHER DEDUCTIONS
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| 2.= |
400.00 |
DISPOSABLE EARNINGS
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| 3. |
100.00_ |
25% OF LINE # 2
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| 2. |
400.00 |
DISPOSABLE EARNINGS (FROM COLUMN 1)
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| 4. |
309.00 |
MINUS AMOUNT EXEMPT(4a,4b,4c,4d)
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4a.
4b.
4c.
4d.
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$154.50
$309.00
$334.75
$669.50
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weekly
payroll
bi weekly payroll
semi monthly payroll
monthly payroll
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| 5. |
91.00_ |
LINE 2 MINUS LINE
4
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| 6. |
$91.00_ |
Compare line 3 with line 5, ENTER the lesser of the two.
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This is the amount needed to complete the calculations below. |
SECOND STEP - PROCEED TO THE APPROPRIATE PAYROLL CALCULATIONS:
PAYROLL 1
a. TOTAL
JUDGMENT & COSTS NOW DUE:
*(from notice of levy attached to writ)
b. AMOUNT FROM LINE 6 OF EXEMPTION
FORMULA:
c. LESSER OF LINE a OR b:
*(Send this amount for 1st levy) |
$1000.00
*
$91.00
$91.00 * |
PAYROLL 2
(if same earning as payroll1):
a. ENTER LINE a OF PAYROLL 1:
b. SUBTRACT LINE c PAYROLL 1:
c. NEW JUDGMENT AMOUNT DUE:
d. AMOUNT FROM FORMULA LINE 6:
e. SMALLER OF LINE c OR d:
*(Send this amount for 2nd levy) |
$1000.00
$ 91.00
$ 909.00
$ 91.00
$ 91.00 * |
PAYROLL 3:
a. ENTER LINE c OF PAYROLL 2:
b. SUBTRACT LINE e PAYROLL 2:
c. NEW JUDGMENT AMOUNT DUE:
d. AMOUNT FROM FORMULA LINE 6:
e. SMALLER OF LINE c OR d:
*(Send this amount for 3rd levy) |
-
=
$ |
________
________
________
________
________ *
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PAYROLL
4:
a. ENTER LINE c OF PAYROLL
3:
b. SUBTRACT LINE e PAYROLL 3:
c. NEW JUDGMENT AMOUNT DUE:
d. AMOUNT FROM FORMULA LINE 6:
e. SMALLER OF LINE c OR d:
*(Send this amount for
4rd levy) |
-
=
$ |
________
________
________
________
________ *
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PAYROLL
5:
a. ENTER LINE c OF PAYROLL
4:
b. SUBTRACT LINE e PAYROLL 4:
c. NEW JUDGMENT AMOUNT DUE:
d. AMOUNT FROM FORMULA LINE 6:
e. SMALLER OF LINE c OR d:
*(Send this amount for
5rd levy) |
-
=
$ |
________
________
________
________
________ *
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PAYROLL
6:
a. ENTER LINE c OF PAYROLL
5:
b. SUBTRACT LINE e PAYROLL 5:
c. NEW JUDGMENT AMOUNT DUE:
d. AMOUNT FROM FORMULA LINE 6:
e. SMALLER OF LINE c OR d:
*(Send this amount for
6rd levy) |
-
=
$ |
________
________
________
________
________ *
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PAYROLL
7:
a. ENTER LINE c OF PAYROLL
6:
b. SUBTRACT LINE e PAYROLL 6:
c. NEW JUDGMENT AMOUNT DUE:
d. AMOUNT FROM FORMULA LINE 6:
e. SMALLER OF LINE c OR d:
*(Send this amount for
7rd levy) |
-
=
$ |
________
________
________
________
________ *
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PAYROLL
8:
a. ENTER LINE c OF PAYROLL
7:
b. SUBTRACT LINE e PAYROLL 7:
c. NEW JUDGMENT AMOUNT DUE:
d. AMOUNT FROM FORMULA LINE 6:
e. SMALLER OF LINE c OR d:
*(Send this amount for
8rd levy) |
-
=
$ |
________
________
________
________
________ *
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PAYROLL
9 thru 16:
a. ENTER LINE c OF PAYROLL
8:
b. SUBTRACT LINE e PAYROLL 8:
c. NEW JUDGMENT AMOUNT DUE:
d. AMOUNT FROM FORMULA LINE 6:
e. SMALLER OF LINE c OR d:
*(Send this amount for
9rd levy) |
-
=
$ |
________
________
________
________
________ *
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****IMPORTANT****
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*NEVER LEVY BEYOND THE EXPIRATION DATE OR WHEN THE AMOUNT DUE IS $0.00.
*THE AMOUNT INDICATED ON LINE "e" OF EACH PAYROLL IS THE AMOUNT SUBJECT TO
LEVY.
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