Using Garnishment to Collect on Debts

Garnishment is a court-ordered process that takes property from a person to satisfy a debt. It is one method of satisfying a judgment. The most common type of garnishment is wage garnishment, in which a person who owes a debt or a sum of money to another may have his or her wages garnished if he or

Only a certain amount of any person's wages may ever be garnished. This amount may be as high as 50 percent of wages for child support or alimony, but generally may be no higher than 25 percent of a person's wages. A list of each state's wage garnishment laws can be found at Fair-Debt-Collection.com. It should be noted that all states allow wage garnishment for alimony, child support, federal student loans, and taxes. Therefore, even if you have a judgment allowing you to garnish wages, you may have to get in line to collect, because there may be another garnishment ahead of yours.

You should be able to garnish wages easily and with little expense if:

• The debtor is not self-employed and receives a regular wage;
• The debtor's pay is above the poverty line;
• Other wage garnishments aren't already in effect, unless your wage garnishment is for alimony or child support; and
• The debtor doesn't file bankruptcy, quit his or her job, or dispute the garnishment.

A wage garnishment is often an incredibly strong incentive for a debtor to pay off a judgment. This is because people won't want their employers to know of any lawsuits against them, and they don't want money taken out of their paychecks. Additionally, before you decide to use wage garnishment to collect your debt, you should consider the possible consequences. Receiving a wage garnishment could possibly cause the debtor to quit his or her job or file bankruptcy, either of which would prevent you from collecting your judgment.

Limitations There are limitations to wage garnishment, as follows:

• People with low incomes are protected from the full force of wage garnishment under federal law, which requires that a wage earner must be left with a weekly wage equal to 30 times the current federal minimum wage. Additionally, under federal law, no more than 25 percent of a debtor's disposable income may be garnished, unless there is a judgment for alimony or child support, for which up to 50 percent or more of the debtor's pay may be garnished.
• The debtor is already subject to another garnishment. Unless your wage garnishment is for alimony or child support, wages typically may only be garnished up to 25 percent. If another debtor is already garnishing the debtor's wages other than for alimony or child support, your garnishment may be disallowed.
• The debtor needs the money that would be garnished for basic support or support of spouse or children.
• The debtor is a federal employee or in the military. You can usually garnish the wages via a federal process, but you will have to endure an unwieldy bureaucratic process to be successful.
• The debtor receives social security, unemployment insurance wages, workers' compensation, disability or health insurance benefits, or payments from a pension plan. Social security benefits can never be garnished, and retirement or pension plans may not be garnished by their terms. Unless your wage garnishment is for alimony or child support, you may not garnish unemployment insurance wages, workers' compensation, or disability or health insurance benefits.

Process for Garnishment
In order to garnish wages, not only must you have a judgment, but you must also obtain a document called a writ of execution for the county in which the debtor is employed. A writ of execution is a written demand to a sheriff or other officer of the court evidencing the debt of the debtor and commanding the officer to take the described property of the debtor (defendant) -- i.e., the money judgment.

Once the court has issued the writ of execution, you take the following steps:

• Establish the debtor's workplace;
• Fill out an Application for Earnings Withholding Order;
• Provide instructions for the officer who will serve the writ by writing a letter with instructions; and
• Wait for the employer to complete and return to you the Employer's Return form.

Wage garnishment forms are available from each state. You should use the forms for the state in which the debtor resides. Instructions for filling out the forms will be provided on various state Web sites.

In the unlikely event that you do not receive the Employer's Return form, you should contact the employer to discover the problem. It is unlikely this will not occur because an employer that does not comply or interferes with a wage garnishment can be subject to civil and criminal action. A phone call will likely speed the process along.

Success
If there are no objections and the debtor loses any Claim of Exemption, then you should expect to receive the money on your judgment, although don't expect it to arrive immediately. Money will be deducted from the debtor's paycheck on a regular basis in the following manner. The employer will deduct the proper amount from the debtor's paycheck and mail it to the sheriff or other designated officer who will then send the payment to you on a regular basis until the judgment is fully paid. It is also possible that once the wage garnishment begins the debtor will suddenly decide he or she has the ability to pay the judgment. Either way, you will receive payment on your judgment.

Once the judgment has been satisfied (all of the money paid), you must inform the levying officer (sheriff or other officer of the court) to return the Writ of Execution to the court.

For more information, go to the Litigation section of the Legal Center at AllBusiness.com.