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Utah Collection Laws

What are the common guidelines for outstanding debt in Utah?

What are the common guidelines for outstanding debt in Utah?

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Highlights

  • Utah wage garnishment rules are fairly simple.
  • It is possible for a judgment-creditor to levy a bank account in Utah.

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.

Utah 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.

In 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.

Wage garnishment is allowed under Utah Rule of Civil Procedure 64D and federal law 15 U.S.C. 1673(a). 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.

Under Utah law the maximum amount of employee’s earnings that may be garnished for a consumer debt is 25%, or the federal minimum hourly wage times 30 times the number of weeks in the pay period. For child support the amount is greater. In Utah, the maximum amount garnished for child support is 50%, or the federal minimum hourly wage times 30 times the number of weeks in the pay period.

Utah Bank Account Levy

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 Utah, levy is called a writ of garnishment and is allowed under Utah Code Rule of Civil Procedure 64D. General exemptions for bankruptcy, garnishment, attachment, and execution can be found in 78B-5-505, 78B-5-506, and 78B-5-508.

Lien in Utah

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.

Utah allows judgment-creditors to place a lien on property, as per Utah Code Section 78B-5-201 and Utah Code Section 78B-5-202.

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

Utah Writ of Execution

A Writ of Execution may be used to seize the judgment-debtor's non-exempt real property or personal property in the debtor's possession. See Rule of Civil Procedure 64E.

Utah Writ of Replevin

A Writ of Replevin may be used to recover a particular piece of personal property in the defendant's possession. A Writ of Replevin is permitted only in narrow circumstances following special procedures. See Rule of Civil Procedure 64B.

Statute of Limitations In Utah

Each state has its own statutes of limitations. The statute of limitations for a credit card (called an open account) is 4 years (Utah 78B-2-307-1b), a spoken contract is 4 years (Utah Title 78B-2-307-1a), a written contract is 6 years (Utah Title 78B-2-309), and either a state or federal judgment is 8 years (Utah Title 78B-2-311).

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.

Recommendation

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

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

Best,

Bill

Bills.com

76 Comments

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  • JN
    May, 2014
    John
    After a judgement has been rendered, do creditors use constables to collect debt money? By that I mean, do they ever have an individual send money to the constable and make it payable to him (his office)? I have read other states do this sometimes. Is Utah one of them? There is a constable calling a friend saying she must do this. I have never heard of this practice in Utah before.
    0 Votes

    • BA
      May, 2014
      Bill
      My cursory research into Utah law leads me to conclude that Utah constables are process servers, and in narrow circumstances are allowed to seize and sell property. However, I do not find anything online that suggests constables are involved in collecting cash from judgment-debtors.

      Consult with a Utah lawyer who has consumer law experience to get a better answer. If you cannot afford a lawyer, contact Utah Legal Services or another Utah pro bono program for no-cost legal advice.
      0 Votes

  • AA
    May, 2014
    Allie
    My fiance short sold a house in 2008. He stopped paying on his credit cards as well hoping that they would go away as well, which, surprise!, they didn't. We've been getting letters recently for settlements from a debt collector however it starts at the bottom because of the age of the debt he cannot be sued for it. First of all, does this mean they are no longer able to garnish his wages and/or put a lien against his business? Also,other than because he owes it,is there any benefit to paying the uncollected debt? Any help would be appreciated as I am in charge of the finances now and would like to start building his credit up to make it in par with mine.
    0 Votes

    • BA
      May, 2014
      Bill
      The only benefit to reaching a settlement on a collection account that is older than your state's statute of limitations is doing so will stop collection agents from contacting you to collect the debt. Paying old collection accounts that appear on your credit reports will not improve your FICO score. FICO is the credit scoring model almost all auto finance companies, credit card issuers, and all home loan lenders use.

      Our advice? Learn your state's statute of limitations. If the clock for your state's statute of limitations for written contracts expired, then send the collection agent a cease communications notice.
      0 Votes

  • TH
    Apr, 2014
    Tiffany
    If you are married and have a judgement against both of you, do they take 25% of both wages or 25% combined? I live in utah.
    0 Votes

    • BA
      Apr, 2014
      Bill
      The general rule is courts treat each judgment-debtor separately. For example, one spouse may have state wage garnishment exemptions available the other doesn't.
      0 Votes

  • HC
    Mar, 2014
    Holly
    I have two collection accounts with the same agency. One of the accounts recently hit the 7 year mark and is no longer showing on my credit reports. I a my getting ready to attempt to settle the second account. I was told by someone at a credit counseling agency that if the collection agency doesn't accept our offer and decides to pursue a judgement that they can legally include both debts. Is this true even though the first debt is now past the 7 years and should be past the statute of limitations in Utah?
    0 Votes

    • BA
      Mar, 2014
      Bill
      The credit counselor you spoke to needs to:
      • Read the Fair Debt Collection Practices Act (FDCPA), which prohibits a collection agent from filing a lawsuit on time-barred debt
      • Read Utah civil procedure rules to understand that separate collection accounts create separate causes of action, and that Utah's statute of limitations is 6 years, and
      • Stop giving legal advice

      The 7-year rule you mention concerns how long a delinquent account can appear on a credit report. This is found in the federal Fair Credit Reporting Act. The FCRA and its rules are separate from, and have no relationship to state statute of limitations rules. When you think about your options for handling a debt-related lawsuit, put the FCRA 7-year rule out of your mind because it does not apply.

      You mentioned Utah. The Utah statute of limitations rule for breach of a written contract is 6 years. When it comes to lawsuits, worry about Utah Title 78B-2-309, and not the FCRA.

      If a collection agent files a lawsuit against you, consult with a lawyer in your state immediately. You want to file an answer, especially if your last payment was more than 6 years ago. If one of the causes of action is older than your state statute of limitations, you can counter-sue under the FDCPA, and win damages based on the collection agent violating federal law.

      0 Votes

  • BD
    Mar, 2014
    Brian
    I had a credit card opened up in Utah, and then I moved to Arizona, and was unable to pay the amount back. The amount went to a collections agency in Utah for the amount of 692 back in 2011. I called them to negotiate a payment and they said the amount is now almost $1000 because they had to sell it to a collection agency in Arizona when I lived there, and then they just bought it back from them. They are asking for more than the $692 as payment. Is this something they can claim, and am I responsible to pay for them selling my collections account from state to state. I also do not have any communication from the Arizona collections company, nor was it reported on my credit report. This seems like they are not being honest with me.
    0 Votes

    • BA
      Mar, 2014
      Bill
      Under the Fair Debt Collection Practices Act, collection agents are not permitted to add interest or other fees to a collection account, unless the contract the consumer signed with the original creditor outlines what extra charges are permitted and state law allows it.

      Scrupulous collection agents who do not have a copy of the original contract will not add interest and mystery fees to the accounts they are collecting. Unscrupulous collection agents, on the other hand, will play the odds and hope the consumers they contact haven't read the FDCPA.

      Our advice? Validate the debt. A debt that cannot be validated cannot be collected. Roughly half of all collection accounts cannot be validated. If the collection agent validates the debt, then negotiate a settlement. Collection agents typically pay less than 10 cents on the dollar for collection accounts. Offer the collection agent $100 to settle the debt.
      0 Votes