A garnishment is one method that creditors can use to collect debts owed. Before a creditor is entitled to garnish, however, the creditor must obtain a judgment from a court declaring that the debt is owed. Though there are some exceptions, for example a garnishment or tax levy, until a judgment has been entered, you do not need to fear a garnishment.
Upon a creditor obtaining a judgment, that creditor can apply to the court clerk for the issuance of a garnishment. The debtor (person who owes the debt) is not notified of the garnishment until the garnishment is sent to the garnishee (i.e. bank or employer). A creditor’s attorney can also issue a garnishment. A garnishment is a court order directing a garnishee (i.e. your employer or your bank) to seize funds owed by the debtor and pay those funds to the creditor. When a garnishee receives a garnishment, the garnishee must send the creditor a response indicating what funds the garnishee holds (or will hold) belonging to the debtor. In the case of a bank account, for example, the bank (as garnishee) is required to seize or place a hold on the funds held on deposit and is then required to forward those funds to the creditor or to the court clerk to pay the amount owed on the judgment. In the case of an employer as garnishee, the employer is required to notify the creditor of when the debtor will be paid, and is then obligated to withhold 25% of the debtor’s wages and send the funds to the creditor to be applied to the debt.
Because a creditor is not required to notify a debtor of the garnishment until it is served on the garnishee, it is often the case that the debtor first learns of the garnishment from an employer or from the bank. Among the paperwork that is provided to the debtor will be a form indicating the name and address of the creditor, and providing a calculation of the amount owed to the creditor. The creditor is also required to provide the debtor with a copy of a form that can be used to challenge the garnishment as well as a notice of what property is exempt (protected) from garnishment. Upon receipt of this form, if the property being seized is “exempt” then the debtor may wish to fill out and file the Challenge to Garnishment form. For example, if the creditor is trying to seize money in a bank account that came from unemployment, those funds are completely (100%) exempt. By filing the Challenge to Garnishment form, and declaring that the money in the bank is, in this example, unemployment, the debtor can have the court declare that the money cannot be garnished and must be returned to the debtor. A Challenge to Garnishment form is included under our Free Legal Forms on our Client Resources page.
In many cases, the property being garnished is either not exempt, or is not fully exempt. For example, in the case of a garnishment of wages, 75% if the wages are “exempt” but the remaining 25% must be turned over to the creditor. The garnishment form provided to the employer contains the necessary information to make this calculation, so there is no need for the debtor to file a Challenge to assert the exemption. In such cases, there are relatively few ways to stop a garnishment. Three methods have proven effective in the past.
The first way to stop a garnishment is to contact the creditor and to fully pay the judgment. In most cases, the debtor does not have sufficient income or other resources readily available to fully pay the debt. However, if the debtor can pay the debt in full, that will satisfy the garnishment and resolve the case.
The second way to stop a garnishment is to contact the creditor and see if the creditor will agree to a negotiated settlement payment. Sometimes creditors will agree to accept regular payments from a debtor, or will agree to reduce the amount of the debt in exchange for a lump sum payment. Realize, however, that a creditor is not likely to accept less than the creditor can get by way of garnishment. In otherwords, if a creditor can garnish $250.00 each month the creditor will probably not accept less than $250.00 per month in payments.
The third way to stop a garnishment is to file a bankruptcy case. The filing of a bankruptcy creates an automatic stay, which prevents creditors from continuing collection efforts, including garnishments. Only the actual filing with the bankruptcy court creates the automatic stay. In other words, simply retaining an attorney, or telling a creditor you intend to file bankruptcy is not enough. The case must actually be filed with the court. This generally means that all necessary information has been provided to the bankrutpcy attorney, the fees and court filing fees have been paid, and the paperwork has been signed by the debtor (client). Because we file all bankruptcy cases electronically with the court, we obtain a case number immediately and are able to send a notice immediately to a garnishee (i.e. employer) once the case is ready to file.
If you are facing a garnishment, you should immediately speak to an attorney. We can help you decide which alternative is the best way to resolve the outstanding debt, and get a fresh start. You can call our office to speak to an attorney at (503) 362-6528.Share