Learn Connecticut's Rules For Garnishment, Liens, and Foreclosure
A lender, collection agent or law firm that owns a collection account is a creditor. The law gives creditors several means of collecting delinquent debt. But before a creditor can start, the creditor must go to court to receive a judgment. See the Bills.com article Served Summons and Complaint to learn more about this process.
The court may grant a judgment to the creditor. A judgment is a declaration by a court the creditor has the legal right to demand a wage garnishment, a levy on the debtor’s bank accounts, a lien on the debtor’s property, and in some states, ask a sheriff to seize the debtor’s personal property. The laws calls these remedies. A creditor granted a judgment is called a judgment-creditor. Which of these tools a judgment-creditor will use depends on the circumstances. We discuss each of these remedies below.
Connecticut Wage Garnishment
The most common remedy judgment-creditors use to enforce judgments is wage garnishment. The judgment-creditor contacts 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.
Connecticut allows two types of garnishment: wage garnishment, and bank executions, which is bank account levy. For wage garnishment, Connecticut follows federal rules, and exempts 75% of the judgment-debtor's disposable earnings (C.G.S. Chapter 906 § 52-361a).
Levy Bank Accounts
A levy means the creditor has the right to take non-exempt money in a debtor’s account and apply the funds to the balance of the judgment. 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.
Connecticut allows bank account levy, which state law refers to as bank executions. Exemptions, found in C.G.S. § 52-352b, include:
- One motor vehicle worth up to $3,000 (fair market value minus all liens and security interests on it), under the CPI conversion factor.
- Necessary apparel, bedding, foodstuffs, household furniture, and appliances
- Tools, books, instruments, farm animals, and livestock feed that the individual needs for his occupation, profession, or farming operation
- A burial plot for the individual and his immediate family
- Welfare payments and wages the welfare recipient earns under an incentive earnings or similar program
- Health and disability insurance payments
- Health aids the individual needs to work or sustain health
- Workers' compensation, social security, veterans' and unemployment benefits
- Alimony and support, other than child support, but only to the extent that wages are exempt from execution
- Court-approved child support payments
- Arms, military equipment, uniforms, and musical instruments owned by someone in the United States armed forces or militia
- Wedding and engagement rings
- One residential utility deposit and one residential security deposit
- An individual's assets or interests in a retirement, Keogh, Individual Retirement Account, or similar plan or arrangement
- An award under a crime reparations act
- Benefits allowed by any association of persons in this state for the support of its members who are incapacitated by sickness or infirmity
- Money due to the individual from an insurance company on any insurance policy issued on exempt property, to the same extent that the property was exempt
- An interest in any property that does not exceed $1,000 in value
- An interest of up to $4,000 in any accrued dividend or interest under, or loan value of, any unmatured life insurance contract the individual owns under which he, or someone whose dependent he is, is insured
- Irrevocable transfers of money to an account held by a bona fide licensed nonprofit debt adjuster for the benefit of the individual's creditors
- A $75,000 homestead exemption for a single person, and $150,000 if a husband and wife own a house jointly. The exemption is $125,000 if the debt relates to medical bills (C.G.S. § 52-352b(t)).
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.
In Connecticut, a judgment lien can be attached to real estate or personal property. The creditor must attach a lien to real estate during the lawsuit itself and, within four months of getting a judgment, the creditor must file a lien certificate with the town clerk in the Connecticut town where the debtor's property is located (C.G.S. § 49-89). For liens on personal property, the creditor files a judgment with Connecticut's Office of the Secretary of State (C.G.S. Chapter 904). A judgment lien has a lifetime of 10 or 20 years in Connecticut, and is subject to the consumer's homestead exemption (C.G.S. § 52-598).
If you reside in another state, see the Bills.com Liens & How to Resolve Them article to learn more.
Connecticut Statutes of Limitation
Each state or commonwealth has its own statute of limitations on civil matters. Here are some of Connecticut’s statute of limitations for consumer-related issues:
|Credit card||6||CGS § 52-576; attachment 1|
|Spoken contract||6||C.G.S. Chapter 926 § 52-581|
|Written contract||6*||C.G.S. Chapter 926 § 52-576|
|Mortgage contract||6||C.G.S. Chapter 846 § 49-13|
|Promissory note||5||C.G.S. § 42a-3-118|
|Judgment||5, 10, 15 or 20**||C.G.S. § 52-598 and § 49-88 and § 52-380a(c)|
|* 4 years for contracts for sale of goods (C.G.S. § 42a-2-725)
** 10 years for a small claims court judgment (C.G.S. § 52-598 (b)). 15 years for lien on property (C.G.S. § 49-88. 20 years for other courts (C.G.S. § 52-598 (a))
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.
When the statute of limitations clock starts depends on the circumstances and the particular statute. In Connecticut, like most states, the clock starts at the time the cause of action accrues. The clock may be paused (called "tolled") under some circumstances, or renewed.
A lender will foreclose judicially in Connecticut. This takes four months, and typically longer. Once the homeowner receives a notice of foreclosure, he or she has has 20 to 30 days to respond. Lenders are allowed to collect a deficiency balance, but the amount is limited by the market value of the property. The lender must ask the court for deficiency judgment within 90 days after sale. See C.G.S. Chapter 846 § 49-1 to 49-31 to learn more.
Connecticut Collection Agency Law
Connecticut collection agents must be licensed as a "consumer collection agency".
Connecticut protects consumers from abusive collections with two laws, the CCPA and the CCA:
Creditor's Collection Practices Act
The CCPA governs collection practices by original creditors and not collection agents. The CCPA mirrors the federal FDCPA in its rules, language, and general consumer protections. The chief difference between the FDCPA and CCPA is the CCPA specifically covers original creditors.
Like the FDCPA, the CCPA gives you a private cause of action if an original creditor harms you in violation of the CCPA. To learn more, see Connecticut General Statutes § 36a–645 to 36a-648.
Consumer Collection Agency Laws
The CCA laws cover collection agents, which Connecticut calls consumer collection agencies. The CCA is similar to the FDCPA in its consumer protections and prohibitions, with three significant differences. The Connecticut CCA prohibits:
- Filing a lawsuit against you on a charged-off debt that they purchased or received from your original creditor
- Adding collection fees in excess of what you would have to pay under Connecticut law for that particular debt
- You filing a lawsuit against a consumer collection agency for a violation of the CCA
Contact the the Connecticut Department of Banking and the Connecticut Attorney General if a collection agent violates the CCA. To learn more, see Connecticut General Statutes § 36a–800 to 36a-810
See the Connecticut Judicial Branch Law Library Services Connecticut Law About Debt Collection page to learn more about Connecticut collection laws.
Consult with a Connecticut lawyer who is experienced in civil litigation to get precise answers to your questions about liens, levies, garnishment, and foreclosure.