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I Can’t Pay the Virginia Employment Commission and Don’t Want to Go Bankrupt. – Linda

“Dear Steve,

I previously owned a company and went out of business due to a number of things. The IRS and the State of Virginia are being very cooperative and recognize my hardship. The Virginia Employment Commission is another matter all together. After several months of me paying them a very small amount, they have decided that is not enough and have garnished my paycheck for 100% so I will get nothing for the next 7 or 8 months if I don’t get fired. I feel like my only option is to file bankruptcy but I didn’t want to do that because I have things worked out with the IRS and the State of Virginia.

Any advice?


single mom narrow

Dear Linda,

I’m assuming this is because of a claimed overpayment by the Virginia Employment Commission. I’m sure you’ve already tried this:

Q: How do I repay an overpayment?

A: Repayment must be made in full. If you are unable to repay the full amount in one payment, you immediately must contact the Benefit Payment Control Unit, (804) 786-8593, to arrange a repayment installment plan. – Source

What if I fail to repay the overpayment?

If the overpayment is not repaid in full before you claim future benefits, a deduction (offset) will be made from these benefits. The VEC will also use other methods to collect the money owed, including collection agencies, credit bureaus, wage garnishment, attachment of bank accounts, and seizing of income tax refunds. The costs of collection, including administrative costs, attorney’s fees, late penalty, and interest can be charged to you. – Source

There are limits on wage garnishment in Virginia but I’m curious if the State is garnishing money they are paying you in unemployment compensation.


Federal law places limits on wage garnishment amounts. However, Virginia imposes even stricter limits. In Virginia, the most that can be garnished from your wages are:

  • 25% of your disposable earnings, or
  • the amount by which your disposable earnings exceed 40 times the federal minimum hourly wage (currently $7.25/hour).

“Disposable earnings” are those wages left after your employer has made deductions required by law.

Example. You take home $700 per week after taxes. 25% of your disposable earnings is $175 and your disposable earnings less 40 times the federal minimum wage is $410. Your creditor can garnish up to the lesser amount, or $175. Thus, $525 of your take home pay is protected under the Virginia garnishment laws. – Source

If you have tried to negotiate a more suitable solution with the Virginia Employment Commission and they are unwilling to work with you then by all means you should speak to a local bankruptcy attorney to find out if bankruptcy can offer you legal protection in your situation.

You can click here to find a local bankruptcy attorney and talk to them for free about your specific situation. Get the facts and then you can make an informed and educated decision if bankruptcy is right for you.

Bankruptcy Articles and Posts You Must Read

To get ready to read the information below with the right frame of mind, please first read How Do I Get Out of Debt Quickly? Change Your Mindset.

Bankruptcy Advice

Life After Bankruptcy

Filing Bankruptcy Yourself

Please post your responses and follow-up messages to me on this in the comments section below.

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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Linda

    Sorry, no, I was not collecting unemployment. They say this is what I owe as a former employer. The state of Virginia does not have to go by federal guidelines and they are taking 100% of my check from my current employer.

    • Steve Rhode

      Why would they be collecting an overpayment of wages from a private employer?

      Here is the VA code on wage garnishment. It does not say 100% is allowed.

      • Linda D. O’Connor

        If you look at section b 3 (b) The restrictions of subsection (a) do not apply in the case of: 3) Any debt due for any state or federal tax.

        It goes on further about support but does not go on about the taxes. This is not an overpayment of wages, it is state unemployment tax/insurance every employer must pay.


      • Steve Rhode

        To be clear, this was a state obligation you were required to pay an an employer?

      • Linda

        as an employer, yes..

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