Friday, January 10, 2003

Debtor Rights of Federal Employees

Other than certain uniformed members of the armed forces, federal employees do not enjoy any particular privilege over private sector employees when it comes to protection from creditors. They do, however, enjoy the same set of protections under federal law as that of any other worker.

Fair Credit Collection Practices Act

    The Fair Credit Collection Practices Act prohibits creditors from harassing you, threatening you or calling you extremely early in the morning or late at night. The Act also gives you the right to send a cease and desist letter to your creditor instructing it not to call you anymore. However, if you send this letter rather than staying in contact, they could be more inclined to file a lawsuit against you.

Federal Pension and Thrift Savings Plan Assets

    Creditors can file lawsuits against federal employees for private debts and even obtain judgments against them or court orders to garnish federal workers' wages. However, they cannot seize any assets in federal pension plans, nor in thrift savings plans. Technically, these funds are not even in your name. Rather, the government holds assets in trust for you.

Soldiers and Sailors Civil Relief Act

    The Act prohibits creditors from evicting or foreclosing on certain active duty members of the armed forces and mandates that the interest on the outstanding debt be reduced to 6 percent. However, the law only applies to service members who entered active duty after they incurred the debt.

Garnishment

    Federal employees, as mentioned, are subject to having their wages garnished, if a creditor obtains a court order for it. However, the creditor can only garnish a certain amount, which varies depending on the debtor's domicile state. Generally, however, the creditor can not garnish more than 25 percent of the employee's take home pay, or 30 times the minimum wage in any given month. Family support orders may result in greater garnishments, however.

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