Bills.com > Manage Debt > Deal with Debt > Debt Relief Q&A > Ohio Collection Laws
Question:
MAR 16, 2013

Ohio Collection Laws

What are Ohio's collection laws, and what rights do creditors and debtors have in Ohio?

Read full question
Share on Facebook 74 Comments
Bill's Answer: Answered by Mark Cappel

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.

Wage Garnishment

The most common method used by judgment-creditors to enforce judgments is wage garnishment, in which a judgment creditor would contact the debtor's employer and require the employer to deduct a certain portion of the debtor's wages each pay period and send the money to the creditor. However, several states, including Texas, Pennsylvania, North Carolina, and South Carolina, do not allow wage garnishment for the enforcement of most judgments. In several other states, such as New Hampshire, wage garnishment is not the "preferred" method of judgment enforcement because, although possible, it is a tedious and time consuming process for creditors.

In most states, creditors are allowed to garnish between 10% and 25% of your wages, with the percentage allowed being determined by each state.

Garnishment of Social Security benefits or pensions for consumer debt is not allowed under federal law. Garnishment may be allowed for child support. Under Ohio law, 3121.03, in no case shall the sum of the amount to be withheld and any fee withheld by the payor as a charge for its services exceed the maximum amount permitted under section 303(b) of the "Consumer Credit Protection Act," 1673.

In Ohio, wage garnishment is allowed under 2716.07. If the judgment-creditor is aware of the debtor's place of employment, it may seek wage garnishment.

Under federal law, the garnishment applies to 25% of the debtor's net take home pay, (i.e., gross pay less statutorily mandated deductions). Garnishment can occur only after the person being garnished has received a 10-day's notice.

However, under Ohio law, you also may contact a budget and debt counseling service described in division (D) of section 2716.03 of the Revised Code for the purpose of entering into an agreement for debt scheduling. There may not be enough time to set up an agreement for debt scheduling in order to avoid a garnishment of your wages based upon this demand for payment, but entering into an agreement for debt scheduling might protect you from future garnishments of your wages. Under an agreement for debt scheduling, you will have to regularly pay a portion of your income to the service until the debts subject to the agreement are paid off. This portion of your income will be paid by the service to your creditors who are owed debts subject to the agreement. This can be to your advantage because these creditors cannot garnish your wages while you make your payments to the service on time.

If you reside in another state, see the Bills.com Wage Garnishment article to learn more.

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. Some states call levy attachment or garnishment.

In Ohio, levy is allowed under 1304.80. As used in this section, "creditor process" means levy, attachment, garnishment, notice of lien, sequestration, or similar process issued by or on behalf of a creditor or other claimant with respect to an account.

This applies to creditor process with respect to an authorized account of the sender of a payment order if the creditor process is served on the receiving bank. For the purpose of determining rights regarding the creditor process, if the receiving bank accepts the payment order, the balance in the authorized account is deemed to be reduced by the amount of the payment order to the extent the bank did not otherwise receive payment of the order, unless the creditor process is served at a time and in a manner affording the bank a reasonable opportunity to act on it before the bank accepts the payment order.

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 refinances 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.

Under Ohio law, property liens are an allowable method available to a creditor for payment of debtor obligations. Please see section 118.20, Authorizing Debt Obligations, for a discussion on property liens. See also the reader comments below for a discussion on liens and foreclosure.

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

Statute of Limitations

Each state has its own statute of limitations. Ohio has the most creditor-friendly statutes of limitations in the country. According to Ohio 2305.07 Contract not in writing, and 2305.06 Contract in writing, the statue of limitations for an oral contract is six years, a written contract is 15 years.

When it comes to credit card accounts, some courts apply Ohio's "open account" statute of limitations, which is 6 years (Ohio R.C. 2305.07). Other Ohio courts use the written contracts rule, which is 15 years for actions accruing before Sept. 28, 2012, and 8 years for actions accruing after Sept 28, 2012 (2305.06 as per SB 224). Others use Ohio's Retail Installment Sales Act, which sets the limit at 4 years (1302.98 and 1317.01). This means that when a local court chooses a credit card statute of limitations, instead of relying on binding precedent from higher level courts (called stare decisis in the legal field), judges seem to apply the rule argued most persuasively by the two parties.

A judgment from an Ohio court is valid for 5 years, and then becomes dormant unless revived by the judgment-creditor (2329.07)

The statute of limitations for recovering a deficiency balance relating to a mortgage foreclosure is 2 years, according to Ohio 2329.08.

See the Bills.com resource Collection Laws and the Statute of Limitations for the rules in other states.

Recommendation

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

Foreclosure

Ohio foreclosure laws are found in 323.28. To learn more about the rules surrounding foreclosure in this state, including deficiency balances, please see 5721.192. If the proceeds from a sale of a parcel under section 5721.19 or 5723.06 of the Revised Code are insufficient to pay in full the amount of the taxes, assessments, charges, penalties, and interest which are due and unpaid; the costs incurred in the foreclosure proceeding, the foreclosure and forfeiture proceeding, or both foreclosure and forfeiture proceedings which are due and unpaid; and, if division (B)(1) or (2) of section 5721.17 of the Revised Code is applicable, any notes issued by a receiver pursuant to division (F) of section 3767.41 of the Revised Code and any receiver's lien as defined in division (C)(4) of section 5721.18 of the Revised Code, the court may enter a deficiency judgment for the unpaid amount as authorized by sections 5721.17, 5721.19, 5723.05, and 5723.18 of the Revised Code, in accordance with this section.

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

Best,

Bill

Bills.com

Rate this article
Not helpful
Awesome
Share on Twitter Share on Facebook

Comments (74)


Matthew M.
Westchester, OH  |  March 16, 2013
I received notification from an area court that a collection agency is attempting to collect an alleged debt from a state university from 1999 and 2002. In the documents the attorney filed with the court, all they provided as validity of debt were account print outs from the university. They haven't provided any written contract bearing my signature. My question is this: doesn't the plaintiff have to prove that I signed a contract agreeing to pay? Also, wouldn't alleged debts from 1999 and 2002 fall outside of the SOL in Ohio? I sent an answer both to the court and the attorney alleging that they cannot prove validity of the debt because they have no written contract with my signature. And since they cannot provide this, do they have any case at all?
Bills.com
March 18, 2013
In general, you are correct — the defendant can challenge the existence of a contract between the parties. If the court determines there was no contract, the plaintiff has no case and the court will dismiss the case. How a defendant accomplishes this defense is the key.

Consult with a lawyer in your state of residence who has civil litigation experience before you file any other answers with the court or communicate to the plaintiff.

Regarding Ohio's statute of limitations, this changed recently. The new rule is the statute of limitations for Ohio contracts is 15 years for actions accrued before Sept. 28, 2012, and 8 years for actions accruing after that date (see Ohio Revised Code 2305.06 for details). Consult with a lawyer in your state to learn which Ohio statute of limitations applies to you. I believe it is the 15-year rule, but a lawyer can analyze your situation in person and in greater depth.
Helen W.
Dublin, OH  |  February 07, 2013
If there is a foreclosure judgment against you in Ohio, but is not recorded against the property, does the five years/dormant ORC apply here?
Bills.com
February 08, 2013
I do not have enough information to answer your question accurately.

If you are asking, "Following a foreclosure in Ohio, does the lender (now a judgment-creditor due to a successful action filed against the borrower) need to perfect its judgment before can collect?" Yes, if it wishes to use the judgment to seize the judgment-debtor's personal property, such a vehicle. An Ohio judgment-creditor must give the judgment-debtor a 45-day notice before it can start garnishing wages.

If you are asking, "What is the statute of limitations for an Ohio judgment? A judgment from an Ohio court is valid for 5 years, and then becomes dormant unless revived by the judgment-creditor. See Ohio Revised Code 2329.07 to learn specifics about this rule.

If you are asking, "Does a non-perfected judgment follow ORC 2329.07 or have a different statute of limitations?" I do not see a separate rule for unperfected judgments, nor do I see in the ORC any mention of perfection starting the statute of limitations clock, or tolling for unperfected judgments. I hasten to add I am not an Ohio lawyer, and know nothing about Ohio's case law here. Therefore, your wisest course of action is to consult with an Ohio lawyer who has consumer law or bankruptcy experience.
Ramonda B.
Ashland, OH  |  November 16, 2012
In Ohio, the ORC 2305.06, the statute of limitations on written contracts is now 8 years, effective 09/28/12, and was previously 15 years. I have a debt from a mobile home that my ex husband took possession of and was to take responsibility for in 1998, per our divorce decree. The trailer was repossessed in 2001, I believe. Has the SOL expired on this debt since ORC 2305.06 has changed? A third party collector tried to contact me.
Bills.com
November 16, 2012
The state of Ohio’s Web site containing Ohio statutes published the following for Ohio Revised Code 2305.06:
2305.06 [Effective 9/28/2012] Contract in writing

Except as provided in sections 126.301 and 1302.98 of the Revised Code, an action upon a specialty or an agreement, contract, or promise in writing shall be brought within eight years after the cause of action accrued.

R.C. § 2305.06
Amended by 129th General Assembly File No. 135, SB 224, § 1, eff. 9/28/2012.
When this statute of limitations applies is unclear from the statute alone. SB 224 is the law the Ohio legislature passed to change 2305.06. When we look back at SB 224, the intent of the Ohio legislature is clear. We find the following two sections in SB 224:
SECTION 3. Subject to Section 4 of this act, section 2305.06 of the Revised Code, as amended by this act, applies to actions in which the cause of action accrues on or after the effective date of this act.

SECTION 4. For causes of action that are governed by section 2305.06 of the Revised Code and accrued prior to the effective date of this act, the period of limitations shall be eight years from the effective date of this act or the expiration of the period of limitations in effect prior to the effective date of this act, whichever occurs first.
Section 3 and 4 are not law, and it is unclear to me why the drafters of SB 224 did not include this language in 2305.06. However, when a court tries to interpret a law, they almost always research to find the legislative intent of the law. A low-level Ohio trial judge is free to ignore the two sections just quoted from SB 224, but he or she skates on thin ice by doing so. A higher-level appellate judge facing at a 2305.06 question will probably look to the legislative intent and SB 224 for guidance.

What does this mean to you? It is likely an Ohio court will apply a 15-year statute of limitations for a breach of contract dispute on an action that occurred before September 28, 2012. In this context, an “action” is the date of first delinquency, which in your case occurred during or before 2001.
K D.
Grove City, OH  |  September 17, 2012
Your article is not quite correct regarding the Statute of Limitations for collecting a deficiency balance from a foreclosure suit. You reference ORC 2305.04 as pertaining to the SOL for collecting a deficiency balance. In fact, that section only applies to recovering "title or possesion" of the property. (The SOL being 21 years after default occurs) If the home was ever used as the borrower's residence, a lender must take action to collect on a deficiency judgment within 2 years from the confirmation of sale date. (See ORC 2329.08)
Rebecca W.
Sciotoville, OH  |  September 08, 2012
Capital One just won a judgement against me for 1000.00 with 3% interest. I have no job, I own my car, live in public housing, receive a medical card, food stamps, and 200.00 a month in child support. I just got married and my husband only makes 260.00 every two weeks to support 4 people. Can the debt collectors attorneys take my son's child support or my husbands wages? He has a separate bank account. Also can they take my car since I have owned it for years?
Bills.com
September 13, 2012
Because you wrote your comment on a page discussing Ohio law, I will assume you are an Ohio resident. Wage garnishment law is set by federal law, but states are allowed to tighten the federal guidelines. In Ohio, no one may have more than 25% garnished from their wages (after deductions required by law). Any sum above 25% is protected from garnishment. That's the federal ceiling. There's also a federal wage garnishment floor Ohio follows, too. A wage earner is permitted to take home 30 times the federal minimum wage (after deductions required by law). This amount is protected from garnishment.

The federal minimum wage as I write these words in mid-2012 is $7.70. A weekly wage of $7.70 x 30 hours is $231. If your weekly take-home pay (after deductions) is $231 or less, your wages up to $231 are exempt and may not be garnished. What is a permitted deduction? Taxes, but not voluntary contributions to a savings or retirement plan.

Let us say your weekly wages are $500 after deductions. The amount that can be garnished is 25%, or $125. Ohio judges are not permitted to take into consideration the number of dependents, loss in family income, medical condition or medical bills, or divorce and order an amount less than what the law allows.

You mentioned a vehicle. A debtor may exempt a motor vehicle up to $3,225 in value from creditors (Ohio 2329.66). If your vehicle market value is at or less than that amount, you need not worry about a judgment-creditor asking the sheriff to seize the vehicle.

You mentioned child support. Child or spousal support is not a wage, and is therefore not subject to wage garnishment. However, if the support amount is considered beyond what is necessary to support the child or former spouse, a court has the option to allow a garnishment.
Rhonda W.
Hamilton, OH  |  July 25, 2012
My husband a notice about a late student loan. Come to find out it's his daughter's loan that he NEVER co-signed. We are very upset. When talking to the lender, we mentioned this had to be "fraud". They are sending us paper work for fraud, however, they will NOT send us a copy of the application we supposedly signed. Is there really a law that they can't send out paperwork if we mention "fraud"? I do recall his daughter asking me for our financial information a few years back stating the on-line app required it. I asked her if she was sure this is not part of a co-signer. She assured me it was not.
  1. Why can't they send us a copy of the signed application?
  2. Even if a daughter accidentally put us as a co-signer, doesn't the lender have to send us papers to sign?
Bills.com
July 25, 2012
My guess, note that word choice, is the loan is private and not federal. Given the behavior of some private student lenders, it is certainly within the realm of possibility the borrower completed the form not realizing she "signed" an electronic form as your representative or proxy. The fact the lender will not provide you a copy of the original with the signature is telling, in my opinion. On to your questions:
  1. The lender may send anyone a copy of the contract, if it so chooses. For reasons it will not disclose, it does not want you to see a copy of the contract. Unfortunately, this leaves you to speculate why it does not, and what the contract does and does not contain. If the lender's argument is the contract is confidential and may seen only by the parties who signed it, then if it claims you are a co-signer, then you should be able to see a copy.
  2. On the other hand, the lender is not required to send you or anyone else a copy of the contract unless it receives a subpena to do so.

My advice? Consult with a lawyer who has consumer law experience. Ask him or her to send the lender a letter asking for evidence you signed the loan contract in question. If it sends you a copy, show it to your lawyer and discuss your option. In the meantime, do not assume you have liability for the debt based only on the lender's spoken claim you do.

Lori M.
Mentor On Lake, OH  |  July 24, 2012
My husband just finished a garnishment of a total of $1,454.77 due to one of those buy here pay here car dealerships. The final garnishment came out on the 20th of this month and today the 23rd of July, we receive a bill from this collection agency wanting another $634.86. We have already gave $500 to a bankruptcy attorney but there is nothing he can do until we pay him the full amount of $1,306 in order to file the bankruptcy. This current bill from this collection agency says nothing in regards to why we should have to pay this amount? Do I ignore it and hope we come up with the money to file bankruptcy or do I make the payments of $100 like they want although I can't afford that amount per month at this time?
Bills.com
July 24, 2012
Is "this collection agency" related to the buy-here-pay-here garnishment? If so, reply with a letter indicating the court-ordered wage garnishment is satisfied, and that you owe no more under that judgment.

If "this collection agency" wishes to collect on a separate debt, send it a debt validation letter immediately according to the instructions on the page I just mentioned. Do not ignore this collection attempt.
Jen S.
Miami, FL  |  June 26, 2012
Question - My husband & I were sued by a daycare in Ohio with whom we tried numerous times to work with, as when they found out that the military childcare subsidy we had received for 18 months was underpaid and we the parents were due a nearly $6,000 credit for our overpayments BUT the credit could only be paid to the daycare who would in turn have to cut us a check if we requested the credit be refunded. We went from having a hand written ledger from the daycare showing we owed $600.00 to a new spreadsheet every week for 3 weeks until they finally stated we owed then $5,700.00 ($3,000 they claimed was from 2 years prior even though the original payment ledger showed no prior balances but credits held over from year to year) We turned down the credit payment and found a new daycare - However they sued us for $6,500.00 - We thought we had all the proof we needed and they even admitted in court that they had no record of past due statements etc. - Well somehow we lost, we got out procedured. The week after the "trial" My husband sent a notice to the court and to the plantiff's attorney letting them know that he had military orders and the Army was PCS (moving us) from Cincinnati to Miami Fl and we only had 60 days in which to move - he sited the service member relief act and requested no motions or ruling be filed until after his report date. - So we got the ruling which the court sat on for 8 business days before mailing and they mailed to our old address - by the time we got it, we were 1 day outside the appeal date - We have an attorney who is former JAG trying to sort this out but according to him, this area court is notorious for not following the rules. Apparently a garnishment order was issued which our attorney never got notice of, nor did we - They are garnishing 25% of my pay and we are hurting since we have not been able to sell our home in Ohio and were already close to being foreclosed on. My husband and I were never residents of Ohio (Missouri is his home of record and mine), I took Florida residency upon moving here which was before the judgement. How can the Ohio area county court collect on this judgement? They have not sought to domesticate the judgement in FL nor MO. Oh and by the way the court has yet to make any ruling on 2 motions our attorney filed 4 months ago (asking for new trial since the transcript shows that the plantiffs attorney admits he never responded to our discovery requests and the judge tells hime he should have known better but it was on us for not filing a motion to force him to). According to my payroll company they don't check to see what state laws should be followed (nice) so what is my recourse since they have already gobbled up $2,800 and we are now going to food banks (4 kids). Any thoughts would be great
Bills.com
June 26, 2012
The facts in your case are distressing. Continue to work with your lawyer on your case.
Joseph B.
Cincinnati, OH  |  April 11, 2012
If you receive a 15-day letter which is notice of garnishment which allows you to submit 25% of your net income per check to avoid your employer receiving garnishment request. If you're paying the company and you get a second 15 day letter from another company on a different debt is there anything you can do other than letting them send it to employer or paying them another 25%? I don't know if i can tell the two creditors that they have to split it. If you have more than one garnishment an employer can fire you without recourse. Really don't know what to do here. The 25% is not bad but the first company would not take a lower payment to avoid sending to employer. Also, how long after they send a 15-day letter do they usually take to file a garnishment with a employer?
Bills.com
April 11, 2012
You are in a difficult situation. Does your employer have a history of terminating employee who have more than one wage garnishment? Or, has your employer stated a policy indicating it will fire people with more than one garnishment?

I assume your creditors are consumer-debt creditors, and not the government. One idea: Allow the garnishments. Creditor No. 1 will receive funds until the garnishment expires or the debt is paid. This will block Creditor No. 2 from garnishing your wages until the first garnishment concludes.

Consult with a lawyer in your state who has consumer law experience to learn more about your rights and liabilities.
Avatar
Joseph B.
Cincinnati, OH  |  April 11, 2012
The whole issue is we are trying to avoid the employer receiving the garnishment request. and I know it is law they can not fir you for garnishment but more than one garnishment in a year you can be terminated without any recourse.....as it is not the employers problem to go thru all the paperwork. So my issue is how to stall them atleast a month going to file chater 7... but if employer finds out job could be gone cause they could probably find another reason in todays economy especialy......since the 15 day letters require you to pay or they submit a garnishment i dont know what to do..... have looked into motion for slow pay and also getting a trustee who divides payment amongst creditors But it is all so vague and does not tell if it stops them from submitting garnishment to employer
Tanya S.
Munroe Falls, OH  |  April 07, 2012
A lawsuit in Ohio had been filed for a cc debt. The debtor was never served and the lawsuit was eventually dismissed for lack of service/prosecution. Although a lawsuit tolls the sol, I read somewhere else that if the lawsuit was dismissed, it is like it never happened, so the sol was, in actuality, not tolled. Is this true?
Bills.com
April 09, 2012
What you described, if true for Ohio, would be another piece of evidence showing the Ohio courts and/or legislature have tipped the tables in favor of creditors.

What you described is not a rule for all states. I do not know if Ohio has the rule you described. Consult with an Ohio lawyer who has consumer law experience to learn the answer to your question. When you learn your answer, please return here an explain what you learned.
Waiting for comments to load Loading more comments
Thanks for your feedback!
 
Articles Ask Bill

Tool Box   Easy to use resources to help you find solutions to your money questions

Thank you for subscribing!