Wage Garnishment in Montana: What the Law Says and What Bankruptcy Changes

How much of your pay can be garnished in Montana?

For an ordinary judgment, MCA 25-13-614 sets the maximum part of your aggregate disposable earnings for any workweek that may be garnished at the lesser of two numbers: the amount by which your disposable earnings for the week exceed 30 times the federal minimum hourly wage in effect when the earnings are payable, or 25% of your disposable earnings for that week. Earnings that are not subject to garnishment under that section are exempt.

The statute borrows its definitions from 15 U.S.C. § 1672. "Earnings" means compensation paid or payable for personal services, whether called wages, salary, commission, or bonus, and it includes periodic pension or retirement payments. "Disposable earnings" are what remain after deducting amounts required by law to be withheld. "Garnishment" means any legal or equitable procedure through which earnings are required to be withheld for payment of a debt.

Because the floor is tied to the federal minimum hourly wage in effect when earnings are payable, the dollar result is not fixed in the statute itself.

• The cap applies per workweek, to aggregate disposable earnings.
• Deductions required by law come out before the percentage is applied.
• Pension and retirement periodic payments fall inside the definition of earnings.

What do Montana statutes require of creditors and courts?

MCA 25-13-614 sets the ceiling on what may be garnished, and 15 U.S.C. § 1673(c) adds that no court of the United States or any State, and no State or its officers or agencies, may make, execute, or enforce any order or process in violation of that federal section. That restriction is aimed at courts and state actors, not at private creditors.

Two Montana provisions cover a narrower situation. MCA § 25-13-504 provides that the garnishment-of-public-officers provisions in 27-18-406 apply to the levy of an execution. MCA § 27-18-406 then describes garnishing money, credits, or other property belonging or owing to another while in the possession or under the control of a public officer or board, by serving the officials it names, such as a county clerk, a city clerk or mayor, or the clerk of a board of school trustees.

Together these statutes do two things: they cap the amount, and they fix how service works when the money is held by a public officer or board. They are not a full account of every step in a private-employer garnishment, so the paperwork your employer received is the better starting point for which procedure and which deadlines apply to you.

• A higher ceiling in federal law does not override a more limited state garnishment rule (15 U.S.C. § 1677).
• Service on a public officer or board follows the specific officials named in MCA § 27-18-406.

Which income is protected from garnishment under Montana law?

MCA 25-13-614(1) is the core protection: earnings of a judgment debtor that are not subject to garnishment under that section are exempt. The lesser-of figure in subsection (2) is the ceiling on what may be garnished, not a minimum left to you — the part of your disposable earnings that the limit does not reach is exempt earnings, not merely earnings a creditor has yet to pursue.

That exemption does not end the moment you are paid. Under MCA 25-13-610(2), earnings exempt under 25-13-614 remain exempt for 45 days after receipt by the judgment debtor and while in the debtor's possession, in a form into which the exempt earnings are traceable. Tracing may be done by first-in first-out, last-in first-out, or any other reasonable basis the judgment debtor selects.

A separate rule in the same statute covers different property. MCA 25-13-610(1) gives a six-month exemption for traceable proceeds where money or other property exempt under 25-13-608 and 25-13-609 has been sold, or has been lost, damaged, or destroyed and the judgment debtor has been indemnified for it. That is two routes, not one: a sale, or a loss with indemnification. The rule reaches the property named in those two exemption statutes, not wages.

Does a garnishment affect your job in Montana?

Montana has its own employment protection. MCA § 39-2-302 states that no employer shall discharge or lay off an employee because of an attachment or garnishment served on the employer against the employee's wages. On its face that reaches both discharge and layoff, and it is not limited by a count of debts.

Federal law adds a narrower floor. Under 15 U.S.C. § 1674(a), no employer may discharge any employee by reason of the fact that the employee's earnings have been subjected to garnishment for any one indebtedness, and § 1674(b) makes a willful violation punishable by a fine, imprisonment of not more than one year, or both, up to the limits the statute states. Section 1677(2) confirms that the federal subchapter does not displace state laws prohibiting discharge where earnings have been garnished for more than one indebtedness.

These are protections against job loss. They are not, by their terms, a remedy for a withholding amount that exceeds the statutory ceiling.

• MCA § 39-2-302 covers discharge and layoff because of an attachment or garnishment served on your wages.
• 15 U.S.C. § 1674(a) is framed around garnishment for any one indebtedness.
• Neither provision states a procedure for recovering money withheld over the limit.

How does filing bankruptcy affect a Montana garnishment?

A voluntary case is commenced by filing a petition with the bankruptcy court, and that commencement constitutes an order for relief under the chapter filed (11 U.S.C. § 301). Under 11 U.S.C. § 362(a), the petition operates as a stay applicable to all entities of, among other things, the continuation of a judicial, administrative, or other action against the debtor that was or could have been commenced before the case, and of the enforcement against the debtor or property of the estate of a judgment obtained before the case. No separate order creates that stay.

The stay has limits written into the same section. Section 362(b)(2)(C) provides that the filing does not operate as a stay with respect to the withholding of income that is property of the estate or of the debtor for payment of a domestic support obligation under a judicial or administrative order or a statute. Under § 362(d), a party in interest may request relief from the stay after notice and a hearing, and the court shall grant it for cause or on the other listed grounds.

• Filing a petition itself operates as the stay; a notice is not what creates it legally.
• Income withholding for a domestic support obligation is excepted under § 362(b)(2)(C).
• Prior dismissed cases within the preceding year can shorten the stay or prevent it from arising at all.

What should you ask a lawyer about a Montana garnishment?

The questions worth asking are the ones about your own paperwork: what notice you were given, which procedure applies to this withholding, and what deadline you are working against. A lawyer or a legal aid office can answer those from the documents in front of you, and the answers often turn on details that a general description of the statutes cannot settle.

Bring your last several pay stubs, the garnishment paperwork your employer received, and anything identifying the judgment. Concrete questions carry further than general ones:

• Is the amount being withheld within the MCA 25-13-614 ceiling for each workweek, given my legally required deductions?
• Is this withholding for an ordinary judgment, or for maintenance or support under subsections (3) and (4)?
• How do I claim the exemption, in which court, and by what deadline?
• Can the 45-day tracing rule in MCA 25-13-610(2) protect wages already in my account?
• Does MCA 31-2-106 change which exemptions I could claim if I filed?
• Have I had a bankruptcy case dismissed in the past year that would affect the stay under § 362(c)(3) or (c)(4)?
• Is any part of this withholding a tax debt or a federal administrative collection, which these state and federal wage-limit statutes may treat differently?

Frequently asked questions

Are child support and alimony garnishments capped at 25% in Montana?

No. MCA 25-13-614(3) states that the subsection (2) restrictions do not apply to an order or judgment for the maintenance or support of any person issued by a court of competent jurisdiction, or under an administrative procedure established by state law that affords substantial due process and is subject to judicial review. Subsection (4)(a) then sets ceilings of 50% if you support a spouse or dependent child other than the one for whom the order was issued, and 60% if you do not.

When can the support ceiling reach 55% or 65%?

Under MCA 25-13-614(4)(b), the 50% figure may be 55% and the 60% figure may be 65% if the earnings are being garnished to enforce an order for maintenance or support for a period prior to the 12-week period that ends with the beginning of the workweek. In other words, older arrears can raise the ceiling. The same structure appears in 15 U.S.C. § 1673(b)(2).

How do prior dismissed bankruptcy cases change the automatic stay?

Under 11 U.S.C. § 362(c)(3), if a single or joint case is filed by or against a debtor who is an individual under chapter 7, 11, or 13, and a single or joint case of the debtor was pending within the preceding one-year period but was dismissed — other than a case refiled under a chapter other than chapter 7 after dismissal under § 707(b) — the stay as to any action taken with respect to a debt, property securing that debt, or any lease terminates with respect to the debtor on the 30th day after the later case is filed. On a party in interest's motion, the court may extend it as to any or all creditors, after notice and a hearing completed before that 30-day period expires, and only if the party shows the later filing is in good faith as to the creditors to be stayed; the motion alone extends nothing. What survives the termination in your own case is a question for a lawyer. Under § 362(c)(4), if a single or joint case is filed by or against an individual and two or more single or joint cases of the debtor were pending within the previous year but were dismissed, subject to the same § 707(b) refiling exception, no stay goes into effect at all. If a party in interest requests it within 30 days of the later filing, the court may impose one as to any or all creditors after notice and a hearing, again only on that good-faith showing, and an imposed stay is effective on the date the order is entered.

Can I use the federal exemption list if I file in Montana?

Generally not, when Montana law governs your exemptions under the federal domicile rules. Montana has opted out, so a debtor to whom its law applies may not elect the federal § 522(d) list (MCA 31-2-106). Which state's law applies turns on the domicile test in 11 U.S.C. § 522(b)(3)(A), covered in the next question, not on where you file. A debtor may still claim property exempt under federal law other than subsection (d), plus qualifying retirement funds under § 522(b)(3)(C).

Does Montana law automatically apply to my exemptions if I just moved here?

Not necessarily. Under 11 U.S.C. § 522(b)(3)(A), the applicable state or local law is that of the place where your domicile was located for the 730 days immediately preceding the filing. If your domicile was not in a single State for that 730-day period, it is the place where your domicile was located for the 180 days immediately preceding those 730 days, or for a longer portion of that 180-day period than in any other place. If the domiciliary requirement would leave you ineligible for any exemption, you may elect the § 522(d) list.

Is the federal 25% ceiling subject to exceptions too?

Yes. 15 U.S.C. § 1673(a) sets the ordinary lesser-of ceiling, but § 1673(b)(1) excepts support orders issued by a court of competent jurisdiction or under a qualifying state administrative procedure, orders of a United States court with jurisdiction over chapter 13 cases, and debts due for any State or Federal tax. Section 1677 also preserves state laws that are more limiting than the federal subchapter.

Sources

• MCA 25-13-614 — Earnings of judgment debtor
• MCA 25-13-610 — Tracing exempt personal property
• MCA § 39-2-302 — Discharge or layoff of employee because of attachment or garnishment prohibited
• MCA § 25-13-504 — Garnishment of public officers
• MCA § 27-18-406 — Money, credits, or other property in control of public officer or board
• MCA 31-2-106 — Montana exemption election
• 11 U.S.C. § 301 — Voluntary cases
• 11 U.S.C. § 362 — Automatic stay · official source
• 11 U.S.C. § 522 — Exemptions · official source
• 15 U.S.C. § 1672 — Definitions
• 15 U.S.C. § 1673 — Restriction on garnishment
• 15 U.S.C. § 1674 — Restriction on discharge from employment by reason of garnishment
• 15 U.S.C. § 1677 — Effect on State laws

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