Collecting a monetary award following a civil trial is known colloquially as judgment collection. It is a responsibility left to judgment creditors – the winning parties in civil lawsuits. The party having to pay the monetary award is known as the judgment debtor. That debtor may be subject to writs of garnishment.
A writ of garnishment is a court order that instructs a third-party to withhold debtor assets and forward them to the creditor for payment. Different types of cash assets can be garnished based on the debtor’s financial position and the jurisdiction in which the civil lawsuit was entered.
The Basics of Garnishment
In rare cases, a writ of garnishment is issued before a judgment is ever rendered. But most garnishment orders or post-judgment orders. A court awards a certain amount of money to the winning party. It is then up to that party to collect. The party might turn around and ask the court for writ of garnishment.
Wits of garnishment are always served against third parties. There are three parties to every garnishment transaction:
- Judgment creditor
- Judgment debtor
- Garnishee
The garnishee is the third-party known to be holding cash assets belonging to the debtor. A garnishee can be an employer, for example. The employer holds cash assets normally given to the debtor in the form of wages and benefits. A certain amount of that money is withheld and forwarded to the creditor as a result of wage garnishment.
A garnishee could also be a bank, an investment broker, or a customer (if the debtor is a business owner). Even another debtor can become a garnishee. His payments can be diverted from the losing party in the lawsuit and forwarded to the judgment creditor instead.
What Can Be Garnished
Writs of garnishment target liquid assets. In other words, cash. Liquid assets are easy to identify and transfer, making writs of garnishment an effective way to exact payment on a money judgment.
When the judgment debtor is an employed individual, his wages and bank accounts can be garnished. Wage garnishment is an ongoing order that remains in force for as long as the individual is employed. Bank account garnishment is a one-off thing. Each time a creditor wants to seize cash assets held in a bank account, a new writ of garnishment must be sought.
If the judgment debtor is a business owner, there are other things that can be garnished in addition to his income. Account receivables are in play, for example. Monies from paid invoices would be withheld from the debtor and forwarded to the creditor.
There Are Limits to Garnishment
As effective as garnishment is, Salt Lake City-based Judgment Collectors say the states impose certain limits on the practice. Some states do not allow wage garnishment at all, for example. However, the collection agency says that most states allow it, but with a maximum allowed amount of 25% of the debtor’s disposable income.
In addition, judgment creditors do not execute writs of garnishment on their own. Writs of garnishment are court orders that must be serviced according to state law. Some jurisdictions allow service by the creditor’s attorney. Most require service by the local sheriff or a process server.
The main advantage of garnishment is that it’s quick and easy. Its main disadvantage is that garnishment doesn’t tend to produce large amounts of money in short periods of time. But in many cases, writs of garnishment are preferred over property liens and writs of execution. Garnishment is a tool that can be used exclusively or as part of a broader collection strategy.
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