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APR 19, 2013

Utah Collection Laws

What are the common guidelines for outstanding debt in Utah?

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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.

Utah 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 a debtor's wages, with the percentage allowed being determined by each state.

Garnishment of Social Security benefits or pensions for consumer debt is not allowed under Utah or federal law. Garnishment may be allowed for child support.

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.

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

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).

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

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Comments (55)


Chip H.
Roy, UT  |  April 19, 2013
My wife took my son to the doctor back on October 23rd. A few weeks later we received the standard letter from the insurance company stating what they paid and the reduced amount for seeing a network doctor. I file the paper work with all the paid bills and time goes on. Fast forward to April 17th when my wife receives a call from a debt collector for the visit in October. Confused she told them she would have to talk with me (her husband). After going through the bills paid we find the information from the insurance company that we received in November. We are confused on how it's at collections because we never received a bill from the clinic we took him too. As we try to figure out the chain of events and why the clinic didn't contact us we realize on our home phone they had called on the March 22nd, but didn't leave a message. Them calling isn't uncommon because they call randomly to remind the family it time for well check ups. The problem we have now is the amount of 220. That we owe is now 275. In calling the clinic and calling back the collection agency neither side wants to reduce the amount that was added. Frustration we have is that we would have paid the bill if we had actually ever received one. The clinic claims that they mailed out 5 statements. We didn't get receive any of them. Would like some advice on how to resolve the issue and pay the clinic for the work they did, but don't feel like the 25% that was added when it went to collections is fair. Especially since we didn't receive any bills. Our mail box is in a locked community unit, so I don't think someone stole all 5 of the bills they sent. I personally believe they didn't mail them to us. Want this in the past, but neither side wants to do anything to help reduce the amount. I would gladly pay 250 to resolve even though it's not our fault in my opinion. My wife is worried that it will damage her 800+ credit score. thank you for your time.
Bills.com
April 29, 2013
If your highest priority is protecting the 800+ credit score, you need to hold your nose play the game by the medical provider or collection agent's rules and negotiate a settlement to the debt that makes either happy. After you do so, send a polite but direct letter to the director of the medical facility briefly outlining the issue, and explain that's why you and your family will no longer do business with the clinic.

If you are not a slave to your 800+ credit score, then keep negotiations open with either the provider or its collection agent, and if you ever wear down either to accept your $250 offer, then you'll achieve that goal.
N J.
Cottonwood Height, UT  |  March 27, 2013
I have a writ of continuing garnishment on my wages from one creditor (law firm) for a credit card debt. A second creditor (law firm) has garnished my bank account on another credit card debt. I was told there could only be one garnishment at a time. Are both of these legal?
Bills.com
March 28, 2013
The rule you mentioned is not quite accurate.

I will assume you are a Utah resident. Under Utah law, judgment-creditors are permitted to garnish up to 25% of your disposable income. In Utah, as in many states, if Judgment-Creditor A is garnishing 15% of your disposable income, Judgment-Creditor B is allowed to claim the remaining 10% left in the federal and state limit. If Judgment-Creditor C comes along later and wishes to garnish your wages, it must wait in line until one of the first two expires.

The second creditor you mentioned in your situation is not garnishing your wages. Instead, it seized the contents of one of your financial accounts. Some states call this an account levy. The Utah legislature covers both wage garnishment and levy in Rule 64D and calls both writs of garnishment. I can find no prohibition in Utah law that prevents creditors from levying a judgment-debtor's financial accounts if the judgment-creditor is already subject to a wage garnishment.
H J.
South Salt Lake, UT  |  February 20, 2013
My husband and I have a judgment against us here in Utah from an apartment complex, and are being summoned. the problem is we don’t feel we owe them. In 2005 I was faced with the executive decision to leave my job due to my then infant son being born with pneumonia and being fatally ill, you can only imagine the medical costs. My husband was then left solely to provide for the household and thankfully found a higher paying position, but we ran into a problem with his pay date...he was only paid on the 18th and rent was due the 1st. We explained this to the manager at that time as well as provided detailed documentation to back up our plea, and she advised she would work with us. I mean after all, we had been tenants for nearly 6 years. This continued for 6 months. The company was sold to another property and the then property manager was fired. To come finding out we were not the only tenants she was allowing to pay late. When the time came to renew our lease, I and my husband were told they would only renew the lease if we paid the back late fees. We of course disagreed to pay the over $4000 and advised no need to renew the lease, we would be moving. The next morning me and my husband awoke to a 3-day eviction notice and were extremely confused as well as angry. Again, we were told to either pay up or leave. Luckily I had a relative in the real estate business and was able to find somewhere to move that same day. They sent the debt to an attorney in 2005 and they continued to harass me and my husband, still and yet we stood firm and explained to them as well as provided documentation that the previous manager wrote to us okaying the late payments to show that we did not owe and why we were refusing. Now, 8 years later, we are being summoned to court for this debt. And just to add, these constables they sent to our home were leaving paperwork with our daughter who was home alone and told to accept the paperwork at the age of 10. I am not fond of grown men using their position to scare my daughter into opening a door and accepting legal documents, but this was their tactic I assume to gain me and my husband's attention. Any advice?
Bills.com
February 20, 2013
Consult with a lawyer who has consumer law or civil litigation experience immediately. You have two strong arguments you can use to ask the court to dismiss the case:
  • Defective service of process: I am not a Utah lawyer, but in most states, serving a 10-year-old with a summons for a family member's debt is not allowed.
  • Statute of limitations: Utah's statute of limitation for breach of a written contract is 6 years. The filing of this action occurred after Utah's statute of limitations clock stopped ticking. Therefore, you should file a motion asking a court to dismiss the case.

Take action; do not ignore the summons. If you cannot afford a lawyer, call your county bar association to ask for the names of organizations in your area that help people with low and no income. Make an appointment with one of these organizations, and bring all of the documents you have regarding this matter to your meeting. The lawyer you meet will help you draft the two motions to dismiss I mentioned. Again, you have an excellent case — taking action will put this matter to rest.

Melissa J.
Grantsville, UT  |  January 18, 2013
My husband received a phone call from a collection agency stating that he owed for an old cell phone bill from 1999. My husband is positive that he paid this prior to entering the military, however because he only kept proof of payment of bills for 8 years, we no longer have proof of payment. Looking at the paperwork that they sent us, the original creditor sold the "debt" to Verizon when they went out of business. Verizon is turn sold it to another agency, that agency has sold it to the company that sent us the paperwork. This is not on my husbands credit report. Isn't this past the statute of limitations?
Bills.com
January 18, 2013
Old cellphone bills seem to be a common issue among Bills.com readers. Some of these collections efforts, I suspect, are for bogus collection accounts. Also, who keeps receipts of their cellphone and other payments for 14 years? On to your questions.

Under the Fair Credit Reporting Act, a federal law, most derogatory marks can appear on a credit report for up to 7½ years from the date of first delinquency. If this debt is legitimate, it could have been reported until 2006.

You asked this question on a page discussing Utah law, so I will assume your spouse is a Utah resident. If so, the statute of limitations for a breach of written contract is 6 years. Assuming the debt is legitimate and the breach of contract occurred in 1999, the statute of limitations expired in 2005. Does this mean the collection agent is stopped from collecting the debt today? No, even a 14-year-old debt can be collected as ridiculous as that sounds. Does this mean the collection agent may not file an action (a lawsuit) against your spouse? No, not in Utah. This means your spouse has an affirmative defense should the collection agent file an action. The defendant needs to raise the statute of limitations as a defense at trial, and if the court believes the evidence, the court must dismiss the case.

What does all of this mean? Should the collection agent contact your spouse again, gather contact information from the collector. Then sent the collection agent a cease communications notice. This notice prevents the collection agent from contacting your spouse to collect the debt. If the collection agent files a civil action against your spouse, consult with a Utah lawyer immediately, and discuss raising the statute of limitations defense in your answer to the lawsuit.
T C.
Centerville, UT  |  January 17, 2013
I have a credit union collection. I received a letter from a collection agency to collect the debt so after a few months I finally paid it. I waited a few more months & called the credit union to see what i need to reactivate my account. They are now saying I owe another agency the same amount that I paid the other agency. Can they do that, charge me for twice for 2 different agency for the same amount?
Bills.com
January 17, 2013
Of course not. What you described is ridiculous, and it is surprising the credit union employee you spoke to even suggested it. Gather all of the documents you have regarding the debt, and write a letter to the president of the credit union describing what happened, and include copies of your proof of payment. In your conclusion of your letter, explain you want the debt removed from your account.
J S.
Sandy, UT  |  August 01, 2012
Rented a car from a local car rental agency in late June, signed one of their standard form contracts and chose not to purchase the additional insurance. Three days after returning the car, signer was notified it had 3 small scratches from a tree limb or bush and they are holding responsible for a $2000 bill. Neither the driver, nor the passengers remember any such incident. To date, the agency has not sent a copy of the repair bill or photos of their claimed damages (despite requests) and are threatening to send to a collection agency tomorrow (Aug 2) if not paid. Any recourse?
Bills.com
August 02, 2012
Three small scratches cost $2,000 to repair? That seems excessive for the damage described.

If the rental agency is not reasonable in its negotiations, your only alternative is the court system. Keep careful notes of your conversations with the rental agency so if and when you appear in court you can show the judge you made repeated, earnest efforts to resolve the issue.
Bilford R.
June 17, 2012
About 4 years ago I was an employee hired to run a project. In the course of events I had to sign some documents (acting as an agent for the owner) for work to proceed. The job fell through and one outstanding bill remained. A collection agency contacted me about it's balance since it was my signature on the work order. The Company that did the work could have, easily, taken out a lien and been paid 3 years ago but instead came after me (I never got paid for ANYTHING of my time and effort on that job). I have been paying the Collection Agency small amounts each month for 3 years. The initial balance is almost paid but they, now, say I owe them 4X as much as the original balance. They are accumulating a 18% APR from a loan the Company took out on the money owed and they are adding that independent loan interest to what they say I owe them. Do I have to pay that? Or am I even legally responsible for this debt being I was acting as an agent for the owner? Please, keep in mind I never got paid anything.
Bills.com
June 21, 2012
Generally, agents do not have liability for an employer's debts. Your signature on an invoice may not obligate you to repay the debt.

I confess I do not understand all of the facts you shared. Specifically, how the employer could have taken out a loan on the amount due. A loan secured by the balance due on another amount due seems like a dream concocted by the collection agent, or a clever Wall Street derivatives broker.

Take the documents you have regarding the debts to a lawyer who has experience in consumer law. I would be shocked to learn you have liability for the debts described.
H C.
Naples, UT  |  May 25, 2012
I received a summons today on a medical bill from 2/09 that I thought had been paid off. The balance due was only about $100.00. The first problem I encountered was that they are asking for the FULL amount plus attorney fees on the summons. I called and spoke with the attorneys office to ask why they didn't have the payments credited to the account/why they were asking for the total due. She fumbled around for a minute and then told me yes, I HAD paid $250 on the account which left a balance of less than $100, but with the attorney fees of $250 everything owed came up to 371.00. I asked if I could settle for 200.00 and she said no. She asked when I could pay it IN FULL and I told her I couldn't, that I would need to make payments of $50 per month. She told me they could not hold the judgement against me, even if I was making payments. First of all, isn't there something I can do about them trying to collect the FULL amount (they have it as $589.00 ) (when it is only truly $371 with attorney fees) with the money credited that I already paid? Sounds like a fraudulent practice to me. If I wasn't paying attention, they could get that judgment in full without the payments I made!
Bills.com
May 25, 2012
First, see the Bills.com article How to Answer a Summons & Complaint to learn what your next step should be if you cannot reach an out-of-court settlement with the law firm that filed the action.

Second, check to see if this action was filed in your state's small claims court. If so, look on your state court or bar associations' Web sites to learn the exact steps you need to follow when answering the complaint. Then, appear for your hearing and argue your case to the court.

Finally, the table is tilted in the favor of the plaintiff here because he, she, or it employed a law firm to handle the case. Consider tipping the table back to level by consulting with your own lawyer so you have a better understanding of the strategy and tactics available to defend yourself.
Michael J.
Sandy, UT  |  May 22, 2012
What percentage of wages can the state garnish for overpayment of unemployment benefits ??
Bills.com
May 22, 2012
I don't see a strict percentage listed. Here is what I found at the Utah government site. "If you are paid benefits to which you were not entitled, an overpayment is created. An overpayment notice may accompany or follow a notice of denial and will contain repayment and appeal instructions. Benefit overpayments are established for the total weekly benefit amount before any deductions such as child support or taxes."

"Repayment of your overpayment as directed is important. Failure to do so may result in recovery of the overpayment by garnishment of your federal and/or state tax refunds, wages, checking or savings accounts or by means of a sheriff's sale of your personal property. You may request an installment agreement to repay the amount you owe."

"If the Department determines that you were not at fault in the creation of an overpayment and you meet the poverty guidelines, you may request a waiver of the non-fault overpayment."
Amy P.
Bountiful, UT  |  February 10, 2012
I am so happy to have found this site. I have a payday loan that is outstanding. Can they garnish my paycheck in the state of Utah? The loan is about $1,500. I took it out to help my brother who was in a bad situation and he still hasn't been able to help me pay it back. It was a poor choice now that I look back. Can you please advise me on my rights? Thanks so much! Amy
Bills.com
February 10, 2012
A payday lender has the same rights, and must use the same procedures to collect a debt as any other creditor in Utah. You did not mention this, but if the payday lender or its collection agent is threatening you with arrest (common for payday collectors), that is an empty threat without a basis in law. Please reread the original article above where we discuss Utah residents' rights, and in particular, the rules for wage garnishment.
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