Alabama Collection Laws

What rights do creditors have under Alabama law to collect debts from consumers?

I owe money to a creditor in Alabama. What can the creditor do to try to collect the account from me?

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Highlights


  • Alabama allows wage garnishment and account levies.
  • The Alabama statute of limitations on credit card debt is 3 years.
  • Consult with an attorney to learn more about your rights and liabilities.

A collection agent or law firm that owns a collection account is a creditor. A creditor has several legal means of collecting a debt. But before the creditor can start, the creditor must go to court to receive a judgment. See the Bills.com resource Served Summons and Complaint to learn more about this process.

The court may decide to grant a judgment to the creditor. A judgment is a declaration by a court that the creditor has the legal right to demand a wage garnishment, a levy on the debtor's bank accounts, and a lien on the debtor's property. A creditor that is granted a judgment is called a "judgment-creditor." Which of these tools the creditor will use depends on the circumstances. We discuss each of these remedies below.

Alabama Wage Garnishment

The most common method used by judgment-creditors to enforce judgments is wage garnishment. A judgment-creditor contacts your employer and requires the employer to deduct a certain portion of your wages each pay period and send the money to the creditor.

n most states, creditors may garnish between 10% and 25% of your wages, with the percentage allowed determined by state law. Garnishment of Social Security benefits or pensions for consumer debt is not allowed under federal law, but may be allowed for child support. See the Bills.com Wage Garnishment article to learn more.

Alabama garnishment rules are found in Title 35 Chapter 11 Article 5. In general, Alabama follows the federal rules for the amount of a garnishment, which allows up to 25% of a worker's wages to be garnished. See the Dept. of Labor's Employment Law Guide - Wage Garnishment and the Dept. of the Treasury's Answers About Garnishments. Municipal and state employees may be garnished.

Generally, 401k or other retirement funds are exempt from garnishment. It is advisable to have those funds specifically deposited into a separate bank account to ensure financial accounting if you are concerned with a garnishment on those payments.

Levy Bank Accounts

A levy means that the creditor has the right to take whatever money in a debtor's account and apply the funds to the balance of the judgment. Again, the procedure for levying bank accounts, as well as what amount, if any, a debtor can claim as exempt from the levy, is governed by state law. Many states exempt certain amounts and certain types of funds from bank levies, so a debtor should review his or her state's laws to find if a bank account can be levied. In some states levy is called attachment or account garnishment. The names may vary but the concept is the same.

In Alabama, administrative levy is allowed under for recovery of taxes and unpaid child support. In Alabama, levy of bank accounts is called garnishment. AlabamaLegalHelp.org offers online court forms a consumer can complete to request to stop a garnishment of a bank account.

If you reside in another state, see the Bills.com Account Levy resource to learn more about the general rules for this remedy.

Lien

A lien is an encumbrance -- a claim -- on a property. For example, if the debtor owns a home, a creditor with a judgment has the right to place a lien on the home, meaning that if the debtor sells or refinance the home, the debtor will be required to pay the judgment out of the proceeds of the sale or refinance. If the amount of the judgment is more than the amount of equity in your home, then the lien may prevent the debtor from selling or refinancing until the debtor can pay off the judgment.

Alabama laws governing liens are Title 35, Chapter 11. Under Section 6-9-211, "Every judgment, a certificate of which has been filed as provided in Section 6-9-210, shall be a lien in the county where filed on all property of the defendant which is subject to levy and sale under execution, and such lien shall continue for 10 years after the date of such judgment..." Mechanics and contractors (and similar laborers and professionals) have the right to place a lien on a property.

If you reside in another state, see the Bills.com Liens & How to Resolve Them article to learn more.

Alabama Statutes of Limitations

Each state has is own statute of limitations. The statute of limitations for Alabama is found in Title 6, Chapter 2. The statute of limitations for open accounts (credit cards) is 3 years (Section 6-2-37), written contracts are 6 or 10 years depending on the circumstances (Section 6-2-33 and 6-2-34), and spoken contracts are 6 years. An Alabama judgment is valid for 10 years, and can be revived for another 10 years (Section 6-9-191 and 6-9-192).

Collection agents violate the FDCPA if they file a debt collection lawsuit against a consumer after the statute of limitation expired (Kimber v. Federal Financial Corp. 668 F.Supp. 1480 (1987) and Basile v. Blatt, Hasenmiller, Liebsker & Moore LLC, 632 F. Supp. 2d 842, 845 (2009)). Unscrupulous collection agents sue in hopes the consumer will not know this rule.

Alabama Foreclosure

See the Bills.com resource Alabama foreclosure to learn more about the rules surrounding foreclosure in this state.

Recommendation

Consult with an Alabama attorney experienced in civil litigation to get precise answers to your questions about liens, levies, and garnishment in Alabama.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com

52 Comments

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  • AB
    Mar, 2013
    Andrew
    My ex-wife lives in Alabama. We divorced in Texas. I appealed and have a court order for her to pay appeal lawyer costs of $22,000 in Texas. I have to pay her alimony of $1300 a month. Can I garnish the alimony that I pay her to pay off that debt? I am in the military and live in Virginia now so I can't afford to go back and forth to Alabama to settle this. What should I do?
    0 Votes

    • BA
      Mar, 2013
      Bill
      Consult with a Texas lawyer to learn what, if any, procedure you may follow to garnish the support payment. If the $1,300 payment you mentioned includes child support, I doubt a Texas family court would approve of a garnishment-like action. However, I am speculating, and am not a Texas lawyer, so I am not competent to give you advice regarding this matter.
      0 Votes

  • AH
    Jan, 2013
    Alicia
    I have a question regarding a civil judgment. I noticed after checking my credit report that I had a civil judgement from an old apartment complex filed in 7/28/2010. The amount is for $1,500, but I do not know what the charges are for. I gave a $700 or so deposit, which should have covered a months rental or any clean-up needed. I was never contacted about this debt and never signed any court documents stating I agreed with the debt or not. Can they garnish my check since it is already filed? Are there steps I can take to lower the debt or understand the debt?
    0 Votes

    • BA
      Jan, 2013
      Bill
      You seem surprised by the judgment, which is the result of a creditor filing a lawsuit against you, and your losing the lawsuit. State and federal civil procedure codes are clear in requiring a plaintiff (a party bringing a legal action to court) to give notice to the defendant (in this case you) of the pending lawsuit. Plaintiffs do so with a document called either a complaint or a summons and complaint that is served on you personally by a process server, by the US mail (if allowed in your state), or some other means intended to alert you to the action. Here, it appears the plaintiff failed to give you adequate notice of the complaint. If the plaintiff failed to follow your state's civil procedure rules, you can can ask the court to vacate (throw out) the judgment against you.

      Consult with a lawyer in your state who has consumer law or civil litigation experience. Bring all of the documents you have regarding your old lease, and the copy of your credit report showing the judgment to your meeting. Your lawyer will advise you if you can file a motion to vacate the judgment, and will help you do so.

      You asked what self-help steps you can take. Some county courts have Web sites that contain public documents regarding civil matters. Take a few minutes to see if the county you reside in now, or if different, the county where your old property was located, has any records online about your case. You may need to visit the county court house civil division in person to request a copy of the judgment filed against you.

      You asked about wage garnishment rules. Most states allow judgment-creditors to ask for a wage garnishment order. See the link I just mentioned to learn how much can be garnished from your disposable earnings.
      1 Votes

  • KF
    Oct, 2012
    Kyle
    I received a process of garnishment from a small claims judgement in 1998 that I assume was a default judgement since I was not aware of it until two weeks ago. I filed a claim for exemption as this judgement was for not fulfilling a health club contract term. I have a family of six, make less than $52K a year, and no assets other than personal belongings. Do I have a chance of having the exemption granted? Presently they are taking $636/month, and it has devastated our finances. Thanks.
    0 Votes

    • BA
      Oct, 2012
      Bill
      I cannot speak for the court with which you filed the exemption.

      You mentioned you were not aware of the judgment. You should have been had the creditor followed your state's civil procedure rules properly. Consult with a lawyer in your state who has civil litigation or consumer law experience. Ask him or her about filing a motion to vacate the judgment on the grounds that the plaintiff did not give the defendant (you) adequate and proper notice of the action filed against you. If this motion is granted, it will quash the judgment, which will void the wage garnishment.
      0 Votes

  • CG
    Aug, 2012
    Candice
    I live in Georgia and I was recently notified by my employer that my wages will be garnished. The Process of Garnishment was done in Alabama, but I have never lived in the state of Alabama. Apparently, I was supposed to have been notified that I had a case against me and I would have been able to defend myself, but I never received anything because I don't live at the address in Alabama that is listed on the Process of Garnishment. Due to the fact I am not in Alabama can I appeal the wage garneshment? I was trying to find information on this type of situation in Alabama garnishment laws, but have had no luck.
    0 Votes

    • BA
      Aug, 2012
      Bill
      Consult with a Georgia lawyer who has civil litigation experience immediately to file a motion to vacate the judgment. You have one or two arguments you can make in your motion. First, you did not receive notice of the action against you in Alabama. This is in violation of Alabama's civil procedure law. Second, you do not mention if the judgment-creditor is a collection agent or original creditor. If the Alabama action was taken by a collection agent, it did not follow the FDCPA, which requires collection agents to take legal action in a court convenient to the consumer.

      If the judgment-creditor is an original creditor, then it is possible the Alabama court had personal jurisdiction over you for reasons you did not mention, but that's complete speculation on my part. Which bring me back to my first point: Consult with a lawyer now to learn your rights and what actions you can take.
      0 Votes

  • JB
    Jun, 2012
    Jessica
    I was sued by my ex-landlord for a debt I do not owe him. He is claiming I damaged the apartment, which I didn't. We have been to court twice and the judge awarded him a judgment without hearing my side of the story. I am trying to figure out is there another way to handle this before he decides to garnish my wages. I live in Montgomery.
    0 Votes

    • BA
      Jun, 2012
      Bill
      Consult with a lawyer who has experience in appealing civil law. If the court transcript of your trial shows the court did not allow you to present a defense, then you have an excellent argument on appeal. Appellate work is very technical, even more so that trial work, and I do not recommend a consumer tackle an appeal on his or her own. As I mentioned, find a lawyer to help you.
      0 Votes