General debt collection involves the use of a limited number of tools to get debtors to pay. When creditors need additional tools, they may go to court in hopes of obtaining a judgment. Success gives a creditor access to more options, garnishment being one of them.
Garnishment generally isn’t the preferred way to get a judgment paid, but it’s often the starting point. Both wages and bank accounts can be garnished in states where the practice is allowed. Strangely enough, not all states offer garnishment as a tool for collecting judgments.
More About the Practice
Utah debt collection agency Judgment Collectors explains that garnishment is a way to forcibly extract payment by way of debtor’s weekly pay or existing bank accounts. Creditors do not have the authority to garnish without first going to court and winning a judgment.
Garnishing a debtor’s wages starts with drawing up the necessary paperwork. That paperwork is then delivered to the debtor’s employer via the county sheriff or the creditor’s attorney. Once in possession of the paperwork, the employer is obligated by law to withhold a certain percentage of the debtor’s pay and forward it to the creditor or its representative.
Garnishing a debtor’s bank account also requires official documents. But instead of those documents being served to the debtor’s employer, they go to the debtor’s bank. The bank is obligated to freeze all or a portion of the debtor’s bank assets and forward the funds to the creditor.
Garnishable Amounts Vary
Judgment Collectors further explains that the amount a creditor is allowed to take from a debtor’s weekly pay or bank account varies from one state to the next. In terms of wage garnishment, the amount is usually a percentage of the debtor’s disposable income.
Disposable income is considered income not necessary to pay one’s basic bills. Let us say a debtor needs 75% of his income to provide for himself and is family. The remaining 25% is considered disposable income. A creditor could only garnish a certain percentage of that amount. If the garnishable amount is 50% of the debtor’s disposal income, it works out to 12.5% of his total income.
A similar scenario exists for garnishing bank accounts. Most states do not allow creditors to take everything. Rather, only a certain percentage can be garnished.
It Takes a Long Time to Pay
Because state laws limit the amount of money that can be garnished from wages and bank accounts, it can take a long time to satisfy an outstanding judgment relying exclusively on garnishment alone. Creditors and their collection agencies will often look to other means that might speed up the process.
Placing liens on a debtor’s property is a viable strategy in some cases. A lien represents a legal interest in the property in question. It would prevent a debtor from selling the property without paying what he owes. The big downside to this particular strategy is the potential of being in the second or third lien position.
Along the same lines is the process of seizing a debtor’s assets and selling them. Once again, state laws vary in terms of what types of property can and cannot be seized. Where property seizure is an option, it tends to be a remarkably effective one.
Judgment creditors do have options when debtors cannot or will not pay up right away. Garnishment is one such option. Garnishment is easy to arrange in states where it is legally allowed, but the amount of money that can be legally garnished tends to be relatively small. As a result, garnishment is not always the best choice.
