Civil Litigtion Basics - Tendering Proposed Orders

The Federal Rules of Civil Procedure, Rule 7(b)(1)(C), requires every motion to "state the relief sought."

The Kentucky Rules of Civil Procedure, Rule 7(1), requires every motion to, "set forth the relief or order sought."

Do we stop there? NO!

There are local rules of court to consult.

The Joint Local Rules For the United States District Courts for the Eastern District and Western District of Kentucky, or whatever the hell it's named, Local Rule 7.1(e), states,

"With each motion and response, you must submit a separate proposed order granting the relief requested or denying the motion. Any proposed order imposing sanctions must be provided separately from a proposed order pertaining to any other matter."

Likewise, the Rules of Practice and Procedure Of the Thirtieth Judicial Circuit, Jefferson Circuit Court, Rule 1405 Proposed Order Required, "A draft of the proposed judgment or order shall be filed along with a motion for its entry."

What better way is there to inform the court what order is being requested if not by tendering an actual order?

There are just countless pesky details.

Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970

I have a genuine knack for allowing myself to be sucked into the most obscure and generally useless backwaters of the legal word, by accident. But since it was so damn difficult for me to even begin to get a grip on the issue, I have to share what I found.

The Home Affordable Foreclosure Alternatives (HAFA) is a U.S. Treasury program which arose from the recent (2007 - 2009) global economic and real estate bad dream. Part of the program provides Federal subsidies to mortgage lenders to encourage short sales for borrowers in financial distress. As part of the HAFA program, residents of the properties which are subject of the short sales (whether owner occupant or rental tenants) are required to vacate the premises when the short sale closes.

Since there are Federal subsidies involved, the mortgage lenders must be in compliance with the requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (42 USC § 4601, et seq.), in general, and specifically, the provisions for resident relocation assistance, found at 42 USC § 4621, et seq.

If you are looking to understand relocation assistance under HAFA, these Code sections and any relevant Treasury Department regulations are the place to look.

I hope that helps.

IRS Tax Levy Garnishment Exemptions

IRS tax levy garnishment exemptions are refreshingly simple. 26 U.S.C. § 6334 - Property Exempt From Levy, provides in part,

"(a) Enumeration

"There shall be exempt from levy —
"(1) . . .
"(2) . . .
"(3) . . .
"(4) Unemployment benefits . . .
"(5) . . .
"(6) Certain annuity and pension payments . . . payments under the Railroad Retirement Act, . . . the Railroad Unemployment Insurance Act, special pension payments received by a person . . .[on the military] Medal of Honor roll . . ., and annuities . . . [for retired military].
"(7) Workmen’s compensation Any amount payable to an individual as workmen’s compensation . . .
"(8) Judgments for support of minor children .
"If the taxpayer is required by judgment of a court of competent jurisdiction, entered prior to the date of levy, to contribute to the support of his minor children, so much of his salary, wages, or other income as is necessary to comply with such judgment.
"(9) [See note below]
"(10) Certain service-connected disability payments . . .
"(11) Certain public assistance payments
"Any amount payable to an individual as a recipient of public assistance under—

"(A) [SSI for the aged, blind, and disabled], or
"(B) State . . . public welfare programs for which eligibility is determined by a needs or income test.

("12) Assistance under Job Training Partnership Act . . . . "

Note:  26 U.S.C. § 6334(a)(9) must be read in conjunction with 26 U.S.C. § 6334(d) the amount exempt from an I.R.S. wage garnishment is the sum of one standard deduction plus each allowed personal exemption, with that annualized amount being pro-rated to the applicable wage pay period. Also,  26 U.S.C. § 6334(d)(2)(B) provides that a verified written statement must be submitted to establish the number of personal exemptions. Otherwise, in the absence of such a verified written statement, the exemption "shall be applied as if the taxpayer were a married individual filing a separate return with only 1 personal exemption."

26 U.S.C. §§ 6334(a)(8) & (9) are the only parts of this section that would apply to a debtor's wages. The payments set out as exempt in paragraphs (4), (6), (7), (10), (11) and (12) clearly cannot be garnished by the I.R.S. directly, but the funds may become vulnerable to a bank garnishment once the benefits have been deposited into an account.

Matthews v. Lewis, Ky., 617 S.W.2d 43 (1981) may provide some traction for a debtor arguing the statutory exemption follows the funds, at least to the extent that they can be traced and identified.  In Matthews workers’ compensation benefits deposited into a checking account had been garnisheed. The Kentucky Supreme Court was asked to decide whether a Kentucky exemption statute (KRS 342.180) precluded the garnishment. The Court ruled that statutory language specifically identifying worker's compensation payments as exempt from execution was intended to preclude garnishment. The opinion observed that:

"Our society's contemporary social programs exhibit a philosophy of relief for the distressed, the impoverished, and the victims of personal and financial catastrophes among us. The Workers' Compensation Act is simply one aspect of those social programs. Kentucky's exemption statutes are simply another necessary instrument in the overall scheme of social welfare programs. They are the teeth in the protection given certain deserving victims from their creditors . . . We hold that unless they provide clearly to the contrary, Kentucky's exemption statutes, including but not limited to KRS 342.180, extend protection to deposits in bank checking accounts so long as those deposits can be identified as or traced to payments of exempt funds."

Debtor Grounds for a Hearing In an Administrative Wage Garnishment

The federal Debt Collection Improvement Act of 1996 provides administrative wage garnishments for the collection of wide array of debts owed to the federal government. Debtors are entitled to request and obtain a hearing to contest such a wage garnishment. The grounds a debtor may assert are as follows.

(1) Existence, validity, past-due status or amount of the debt: Objection on grounds that –

• The debt was previously paid or settled in full
• The debtor is in compliance with a valid repayment agreement
• The amount owed on the debt is incorrectly stated because not all payments had been credited
• The debtor has a legal defense as to liability for the debt under Federal or State law

(2) Enforceability of the debt through  Administrative Wage Garnishment (AWG):

• The debt was discharged or is currently in active bankruptcy
• The debt is unenforceable by AWG due to involuntarily separation from previous employment and debtor currently employed for less than 12 months

(3) Financial hardship: Garnishment of fifteen  percent (15%) of the debtor’s disposable pay will create a financial hardship on the debtor and his or her dependents .

What's the maximum amount of wage garnishment?

The Federal Consumer Credit Protection Act of 1968, as amended in 1977, set national restrictions on wage garnishment, applicable in each of the 50 states. Some states have established greater restrictions, but none may allow lesser restrictions. So, the maximum amount that may be garnished from wages under Federal law is the maximum everywhere in the United States even though the individual states are allowed to provide a lower maximum, and many have done so. In other words, the states may be more debtor-friendly than the Federal law, but they cannot be less so.

The relevant Federal statute is found at 15 USC § 1673 - Restriction on garnishment. "No court of the United States or any State, and no State (or officer or agency thereof), may make, execute, or enforce any order or process in violation of this section." - 15 USC § 1673(c).

Different types of debt - different limits

These Federal law restrictions on wage garnishment do not apply to:
(1) The collection of any Federal or State tax, and;
(2) Orders of a United States judge in a Chapter 13 Bankruptcy proceeding.
        - 15 USC § 1673(b)(1)(B and C).

This Federal statute envisions two different type of debt, and it imposes different limits on wage garnishment for each type, with a few variations:

1. Court ordered support payments, and;
2. All other debts.

With either type of debt, wage deductions required by law are subtracted before any garnishment calculation is made. Examples of legally required deductions are federal, state and local income taxes, Medicare tax, Social Security contributions and the employee portion of state unemployment compensation insurance.

Deductions that are not required by law do not count to reduce your disposable income. These include union dues, life and health insurance and most retirement plan contributions.

In short, earnings - taxes = disposable wages subject to garnishment.

Wage garnishment for court ordered support payments

The rules are different depending upon two factors:

1. If the support payment is more than 12 weeks past due, and;
2. If you are providing support for a spouse or dependent child in addition to the person covered by the support order.

There are four different combinations of these two factors, and they each have different rules.

• Support payments 12 weeks past due and no other support obligation
  - 65% of disposable wages may be garnished.
• Payments 12 weeks past due with another support obligation
  - 55% of disposable wages may be garnished.
• Support payments up-to-date and no other support obligation
  - 60% of disposable wages may be garnished.
• Support payments up-to-date with another support obligation
  - 50% of disposable wages may be garnished.

Wage garnishment for all other debts

For all other debts, the maximum wage garnishment amount is 25% of disposable income or thirty times the Federal minimum wage on a weekly basis, whichever is less. It's not that complicated.

Right now the Federal minimum wage is $7.25 per hour. That times thirty equals $217.50 for one week. If your disposable income for one week of work is less than $217.50, then none of it may be garnished to pay general debts.

If your disposable income for one week of work is greater than $217.50, then it is necessary to solve two simple arithmetic problems and then to compare the results.

First, subtract $217.50 from your weekly disposable earnings.

Second, multiply your weekly disposable earnings by 0.25.

Then, whichever is LESS, that's the maximum amount that can be garnished.

Of course, this is all based on weekly earnings. If you get paid once every two weeks or on some other payment schedule, you have to make adjustments.

And remember, different states may offer lower maximums and other types of exemptions.