What is a garnishment?
Let’s start with the judgment – because for everything except student loans and taxes, no* garnishment can happen without first obtaining a judgment. At least, not in Alabama. If you get sued and lose, or don’t bother to answer, then the person who sues you gets a judgment against you. What is a judgment? It is a piece of paper saying that Mr. X owes Mr. Y $####. But it doesn’t magically teleport money from your bank account to Capital One. It has to be enforced against something that you have. If you own real property, they can place a lien on that property. If you have money in a bank account, they can garnish the bank account. If you own a vehicle, they can request that the sheriff take it and sell it and give the money to your creditors (this is called a “levy”). If you have a job, then they can take some of your paycheck each month. This is a garnishment.
Garnishment is the process of intercepting money that is owed to a judgment debtor by a third party. For instance, a bank account is a debt owed by your bank to you. You deposit money at Regions Bank, and pursuant to their depository account agreement with you, they are obliged to pay you back upon request. A bank account garnishment intercepts the money the bank owes you and takes it to pay to the creditor.
A wage garnishment intercepts the money that your employer owes you and takes it to pay the creditor. There are limits to what can be garnished. They cannot take more than 25% of your paycheck, and if you make minimum wage or something close to that, they cannot take more than 30 hours of minimum wage per week – nowadays about $217/week. What a relief.
Some streams of income are utterly exempt from garnishment: Social Security & VA benefits, child support, most public pensions. And these funds should always be kept in an account separate from that of your other income – If you mix exempt money with nonexempt money, your creditors can take it all.
Furthermore, the Alabama Constitution provides a special protection for any regular paycheck under $1,000.
Exemption rights other than the 25% limit do not enforce themselves. You have to claim them. You do this by filing a declaration and claim of exemption with the court. You can find a form for it here: http://eforms.alacourt.gov/Do%20It%20Yourself%20Forms/Declaration%20and%20Claim%20of%20Exemption%20for%20Wages.pdf
How do you avoid a garnishment?
Undoubtedly, the best way to avoid a garnishment is to not let it get there in the first place. This means that you should fight them for every dollar. Like I said, they can’t get a garnishment until they first get a judgment. They can’t get a judgment without filing the lawsuit and serving it on you personally, your agent, or at your home address. So if you receive a lawsuit, YOU MUST ANSWER THE COMPLAINT.
You may be able to answer the complaint yourself, but you should not go to trial without a lawyer. In fact, that’s a straight-up bad idea. Collection defense is not that expensive.
Some people are afraid to fight, thinking that if you fight them and lose, they’ll add attorneys fees to what you already owe. NEWS FLASH: they’re charging you their attorney’s fees anyway! And you have a better chance of winning than you think.
And if you’re just a frightened, risk-averse person who is deathly afraid of a trial, then you can always negotiate after you’ve sued. If you have a good collection defense lawyer on your side, your chances of getting away with a good deal are better than they were before you got sued. It’s only after they’ve gotten a judgment that you’ve lost much of your bargaining power.
So if you really want to be proactive about protecting your wages, you will fight your creditors and collectors from the start. Call me at 251.272.9148 if you want to talk about beating your creditors in court.
Continue to Part III: Responding to Garnishments After the Fact.
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Page 1: The Shock of Garnishment <<< Page 2 >>> Page 3: Responding to Garnishments
*There are some occasions where it may be possible to garnish a debt or bank account pre-judgment, but it is something I have NEVER seen actually done. Like some of those laws that exist on the books but nobody ever enforces.