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How Non-Mandatory Union Dues Can Hurt a Debtor in Bankruptcy

Steven J. Richardson
Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.
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Butler County Pennsylvania House Republican Daryl Metcalfe is proposing legislation that would end mandatory payment of union dues as a condition of employment in the state. Sounds great, right? You are not required to join a union in order to get a state job. You also do not have to have more money taken out of your paycheck.

However, that can cause a problem for you if you do want to be a member of the union, are paying dues, but then have to file bankruptcy.

If you are over the median income in your state for your household size, you have to prove that you do not have significant income left over to pay debts in a means testing analysis. Part of the analysis involves taking the gross pay and taking out payroll deductions to calculate the net.

Well, your union dues are a payroll deduction, so that can be deducted from the net, right? Wrong! If the dues are not mandatory (i.e. required for you to keep that job), they cannot be deducted in means testing! When it comes to the proposed legislation, this comes under the heading of "unintended consequences."

On the whole, I am sure that many PA state employees would welcome not having the expense of a union if they do not want to be a member, but those who do would want to protect those moneys from creditors. Perhaps this is another example of "be careful what you wish for."

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