Cote, 2011 VT 92.
Despite the length of the SCOV’s opinion this is a one-trick pony. Husband and wife divorce. Husband is ordered to pay wife $2000 a month in support. Husband fails to make payment. Wife cannot support herself and bank begins to foreclose on her house. Wife files to enforce the order and to garnish husband’s income and meets a federal road block.
Husband has two sources of income: social security income and veteran’s benefits for disability. Both are federal programs. While
law puts no restriction on garnishment, federal does limit what can be garnished. There is no dispute that husband’s social security income can be garnished, but federal law limits such garnishment for support of a spouse to no more than 55% of husband’s total income. Vermont
Husband argues that his veteran’s disability benefits, which constitute more than half of his monthly income, are not “earnings,” and therefore cannot be included in calculating the total wages for garnishment. Husband instead points to federal law, which labels such payments to be “remuneration for employment,” which cannot be garnished. Moreover, it cannot be included in the total available income for garnishment, and its removal drops the available total income for garnishment sharply.
The key here is the difference between an award for spousal support and garnishment. Wife’s arguments are that prior case law supports garnishment because the SCOV and the federal courts have award spouses support from their former spouses’ disability benefits. But as the SCOV notes, these orders are only support orders, like the one that wife original received from the family court. For such orders veteran disability benefits are available and considered for calculating support payment, but this case is about garnishment.
Garnishment is an order from the court to an employer or payment maker, in this case the federal government, to pay part of one person’s income to another. Federal law specifically restricts, for better or for worse, the federal government to do that for disability payments.
You can see the logic here. The federal government is trying to protect disability benefits from creditors, but the result is off-key as husband gets a shelter for over half of his income that rightfully belongs to wife.
The SCOV’s hands, though, are tied by the federal statute, and wife is out of luck. She will have to accept the lower garnishment and look for other remedies against husband. It may be a good cause for our Representative Welch to consider considering the growth in disabled veterans and likelihood that this scenario will only repeat.