A Chapter 13 EDO is much different than a state ordered garnishment of your wages. EDO is an abbreviation for an Employer Deduction Order which is a signed order by a Federal Bankruptcy Judge.
In Georgia, the most important difference is the liability for your employer. Under Georgia State Law, if your employer makes an error in paying a Georgia garnishment, they can be held liable for the entire amount of your debt. For this reason, most employers hate garnishments because of the potential liability. In contrast, there is very little liability for an employer with respect to a Chapter 13 EDO. For example, if an employer deducts the wrong amount from a debtor’s paycheck in a Chapter 13, it is the debtor’s responsibility to send in the difference to the trustee. This type of error can be easily fixed by your bankruptcy attorney calling your payroll department and faxing them another copy of the EDO.
A second difference between a Chapter 13 EDO and a Georgia garnishment is the creditors that are covered by the deduction. With a Georgia garnishment, the only creditor that receives money is the one who filed the judgment and the subsequent garnishment papers. Paying your house payment can be extremely difficult when one single creditor soaks up one fourth of your take home pay with a garnishment of your paycheck.
In contrast, a Chapter 13 EDO covers all of your future car payments, arrears on your house, credit card payments, and any other unsecured debts. Before any Chapter 13 bankruptcy is filed, your bankruptcy attorney will go over your entire budget and make sure you can actually afford the Employer Deduction Order.
A third difference is the amount of money you pay. With a Georgia garnishment, twenty five percent of your net income will be taken out of your paycheck regardless of your ability to pay. In contrast, your Employer Deduction Order is determined by your ability to pay.
An Employer Deduction Order commands employers to stop all Georgia garnishments of your wages. As a result, you should never have to worry about an Employer Deduction Order and a Georgia State Court ordered garnishment coming out of your paycheck at the same time.
3. How much does it cost to file?