Virginia Law

Article 2. Assignment of Salary, Wages, or Income.

Upon petition of a debtor for the assignment of his salary, wages, or income to a trustee for the benefit of his creditors, a judge may appoint a trustee, subject to the supervision and order of the court, to receive such salary, wages, or income of such debtor and pay off the obligations due by such debtor as provided in this article, provided that a majority of the creditors have provided written consent of such assignment to the court. If the debtor is employed on a salary or for wages, the written consent of his employer is required.

1936, p. 523; Michie Code 1942, § 5278e; Code 1950, § 55-161; 2005, c. 839; 2019, c. 712.

A trustee appointed pursuant to § 8.01-525.6 shall make written reports to the court as required by the court. The trustee may charge a fee of five percent of such salary, wages, or income received and disbursed by him; however, no public officer or employee who receives a full-time salary and who acts as trustee under this article shall retain such fee for his personal use.

The trustee, upon being appointed, shall give written notice to any person, firm, or corporation who may owe the debtor any salary, wages, or income, and upon receiving such notice such person, firm, or corporation shall pay to the trustee any salary, wages, or income that are owed to such debtor, at the time it would otherwise be due to the debtor.

The trustee may compromise and settle any claims against the debtor when he believes such compromise shall be for the benefit of all the creditors.

1936, p. 523; Michie Code 1942, § 5278f; Code 1950, § 55-162; 2019, c. 712.

The trustee may resign at any time after accounting for all funds in his possession, and the court may appoint another trustee.

1936, p. 524; Michie Code 1942, § 5278i; Code 1950, § 55-163; 2019, c. 712.

The trustee shall immediately upon receipt of such salary, wages, or income, or at such other time as the court may direct, disburse the funds as follows:

1. The trustee shall first pay to the debtor directly, or for his benefit as the court may direct, any amount the debtor may be entitled to as exempt by law if he is a householder and head of a family or, if he is not a householder or head of a family, then such amount for the necessities of life as may be agreed upon by the creditors in the assignment. Nothing in this subdivision shall prevent the trustee from paying to the debtor a greater amount than is exempt by law if agreed to by the creditors and approved by the court.

2. The trustee shall next pay, according to such funds as he has in his possession, a pro rata share of the balance to all the creditors on an equal basis or in such proportions as the creditors may agree.

1936, p. 524; Michie Code 1942, § 5278g; Code 1950, § 55-164; 2019, c. 712.

When the assignment is executed and approved by the court and the trustee has been appointed and notice given to the creditors listed in the assignment, such assignment shall be deemed legal and binding upon all creditors and such salary, wages, or income shall be exempt from garnishment, levy, or distress during such time as the assignment is in existence. Such assignment shall have priority over all liens subsequently obtained.

1936, p. 524; Michie Code 1942, § 5278h; Code 1950, § 55-165; 2019, c. 712.

The court may, at any time, upon a motion stating that the terms of the assignment are not being complied with, order the debtor and trustee to appear before the court, and the court may, if the evidence justifies, or, in its discretion, declare the assignment null and void. When such action is taken by the court, a written notice shall be sent to all persons named in the assignment.

The court may, on its own motion, revoke the assignment whenever it determines that the ends of justice are not being attained.

When the assignment has been fully complied with, the court shall discharge the trustee and notify the employer of the debtor, if there is one, that the debtor is entitled to receive his entire salary, wages, or income directly.

1936, p. 524; Michie Code 1942, § 5278i; Code 1950, § 55-166; 2019, c. 712.

The clerk of the court wherein any assignment is filed, as otherwise provided by law, shall maintain the court records of such assignment, together with all reports of the trustee, and shall keep an index of all such assignments. For filing the assignment, the fee as prescribed in § 17.1-275 shall be charged.

1936, p. 524; Michie Code 1942, § 5278j; Code 1950, § 55-167; 1994, c. 432; 2019, c. 712.