Advice on Judgment Garnishment
- Review the ways a creditor can collect on a debt after receiving a judgment.
- Understand that how much a creditor can garnish varies from state to state.
- Consult with an attorney, to find out how a judgment will affect you.
What will happen when judgment has been filed against you at the courthouse?
What will happen when a judgment has been filed against you at the courthouse for debts that you owe?
The answer to your question depends primarily on your state of residence, as each state regulates what actions judgment holders can to enforce judgments they have obtained. I will explain the details in just a moment.
The most common method used by judgment creditors to enforce judgments is wage garnishment, in which a judgment creditor would contact your employer and require your employer to deduct a certain portion of your wages each pay period and send the money to the creditor.
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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, while possible, it is a tedious and time consuming process for creditors. In most states, creditors are allowed to garnish wages between 10% and 25% of your income, with the percentage allowed being determined by each state.
For example, if you live in California, which allows for 25% wage garnishment, and you take home $2,000 per month, a judgment creditor could garnish you at the rate of $500 per month until the debt is paid off. Keep in mind that, generally, only one garnishment is allowed at a time, so if you have several judgments against you, the one who contacted your employer first would be paid first from the garnishment, then the second, and so on. Another important point to remember is that Social Security benefits, pension payments, and many other types of income for the elderly and disabled, are exempt from garnishment, which means that most elderly Americans do not need to fear wage garnishment if they are unable to pay their bills.
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The US Dept. of Labor offers several resources explaining wage garnishment rules in general, and Title III, Consumer Credit Protection Act (CCPA), specifically.
Levy a Bank Account
Another option for a creditor trying to enforce a judgment is to request that your bank to place a levy on your bank account. Basically, this means that the creditor has the right to take whatever money in your 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, you 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 you should carefully review your state's laws to find out if your bank account can be levied.
The third common way that creditors enforce judgments against consumers is by placing liens on properties owned by judgment debtors. For example, if you own a home, a creditor with a judgment against you will likely place a lien on your home, meaning that if you sell or refinance your home, you 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 you have in your home, then the lien may prevent you from selling or refinancing until you can pay off the judgment.
Again, every state has its own rules about property liens, so if you have a judgment against you and own property, you should review your state’s laws to find out what your creditor can and cannot do to enforce its judgment.
To learn more about your state’s laws regarding the enforcement of judgments, I encourage you to visit the Bills.com State Consumer Protection Laws and Exemptions page.
If you have a judgment against you, consult with an attorney licensed in your state to learn how the judgment will affect you, based on your individual financial circumstances.
I hope this information helps you Find. Learn & Save.
Struggling with debt?
If you are struggling with debt, you are not alone. According to the NY Federal Reserve total household debt as of Quarter Q4 2022 was $16.91 trillion. Student loan debt was $1.60 trillion and credit card debt was $0.99 trillion.
A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by Urban.org from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.
Each state has its rate of delinquency and share of debts in collections. For example, in Ohio credit card delinquency rate was 4%, and the median credit card debt was $412.
Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.
You almost certainly have a statute of limitations defense available to you. Consult with an Ohio lawyer should the lender file an action against you in Ohio, or a Georgia lawyer should the lender file an action in Georgia.
If you cannot afford a lawyer, contact Indiana Legal Services or another Indiana pro bono program for no-cost legal assistance.