Garnishments

One of the most effective actions a creditor can take when trying to collect a judgment is a garnishment. Typically speaking there are two types of garnishments that can be filed, a wage garnishment which withholds funds from a debtors paycheck and a bank garnishment which freezes money in a bank account. While these can be use full tools knowing how to properly file these actions is necessary for a successful collection.

Wage garnishments allow creditors to force a portion of a debtors wages to be trapped to pay towards the outstanding judgment. A wage garnishment is not an action filed against the debtor but is rather served directly to their employer. Wage garnishments are typically only effective against debtors who are W2 employees. Self employed and 1099 contractors are usually not affected by wage garnishments as they themselves would be responsible for the withholding and if they are already avoiding paying the judgment they will likely not honor the garnishment. When a garnishment is successful there are maximum amounts that are allowed to be trapped. Federal law caps the withholding amount to 25% of a debtors pay per pay period regardless of the amount of money they make. Additionally most states have minimum pay requirements so the amount being withheld can be less than 25%. Some states also have exemptions that prevent the primary breadwinner in a home from garnishments or those that are the primary guardian of someone who is disabled. Wage garnishments should be considered however in any judgment enforcement action because they generate a steady stream of payments against the debt owed.

Judgment creditors can also file a bank garnishment which effectively freezes funds that a debtor holds in their bank account. Once frozen creditors can file a turnover motion which forces the funds trapped to be released directly to the creditor. Like a wage garnishment, this action is initiated against the bank itself and not the debtor. Some states do have restrictions on how much can be withheld from a debtors bank account with consumers typically having an amount that is exempt. Businesses however typically are afforded no exemptions meaning their entire account can be frozen up to the judgment amount. Bank garnishments are a very effective tool however they must be handled with proper considerations. As the action is filed against the bank itself, the bank may request attorney fees as they incur legal fees answering the garnishment when an account is not found by the debtor at that institution.