How does an employee’s bankruptcy effect garnishment of wages for an employer?

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How does an employee’s bankruptcy effect garnishment of wages for an employer?

I am responsible for payroll and garnishments for my employer. I have garnishing wages for an employee and have not released the monies to the plaintiff. Her attorney has presented me with a notice that a bankruptcy case has been filed. Do I return the monies collected to the employee, or her attorney’s trust or wait for instructions from court. If I am to wait do I continue to garnish her wages?

Asked on August 14, 2012 under Bankruptcy Law, Michigan

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

When there is a bankruptcy with respect to a person all civil proceedings in state court are stayed (put on hold). If you have wages segregated per a wage garnsihment order of a judgment creditor but the employee has filed for bankruptcy protection you are not to distribute the set aside wages to the judgment creditor. You should ask the attorney for the judgment debtor (employee who filed for bankruptcy protection) for instructions in writing as to how to proceed and follow such.


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