As with every other court action, garnishment, seizing a debtor’s assets to pay off the debt owing to the claimant, is a lengthy process. It requires filing more court documents, serving all parties involved, adhering to legal paperwork requirements, and initiating other legal actions, if necessary.
A collection agency, such as CECA, can make this process easier. If garnishment needs to be enforced to get the debt owed, CECA will move quickly. We know the Small Claims Court garnishment procedure intimately, having filed many enforcement actions for our clients over the years.
Before the garnishment process can begin, the debtor must meet at least one of the requirements for collection of the debt. These include cash, material assets, or third-party debt owed the debtor. The claimant can discover the debtor’s assets at an examination hearing. During the hearing, disclosures about:
- the debtor’s employer
- their place of employment
- what personal and financial assets they own
will be uncovered, if the debtor is cooperative. The breakdown of personal assets falls into two categories, personal property and land property. Personal property includes:
- household items of worth (plasma TV, valuables, furnishings)
- personal transportation and recreational vehicles (SUVs, RVs, boats)
Land property includes real-estate holdings (buildings and/or land). Financial assets are kept in financial institutions where accounts are held, including jointly-held accounts.
Rules for garnishment are specific and cannot be deviated from. For example, the Wages Act, part of the Rules of the Small Claims Court rules guide, limits the dollar amount of earnings that can be deducted from the debtor’s paycheck. However, there are exceptions to types of earnings that can’t be garnished. They include:
- work insurance.
- government aid.
- retirement earnings.
For financial assets that may sit in an account at a bank or savings and loan institution, they cannot be touched for purposes of garnishment. Apart from these exceptions, other categories of third-party debts owed the debtor can be garnished.
To garnish earnings, the employer’s full legal name and place of employment address is needed. If these items are not provided as specified, the employer may not cooperate. To garnish a bank account, the institution’s name and bank branch, where the debtor does their banking is necessary.
The first step in garnishment is completing an Affidavit for Enforcement Request, which verifies the garnishment notice. A Notice of Garnishment accompanies the affidavit. For each garnishee (third-party debtor), both an affidavit and garnishment notice must be completed, filed with the court, and served on the debtor and garnishee. Service to the debtor and garnishee must be completed within five business days. The court must also be provided with Affidavits of Service on both parties.
Third-party debtors can include a co-owner. A co-owner listed on a joint checking account, for example, can be garnished for as much as half the debt owed. The garnishee must disclose co-owners of the debt owed. The claimant then serves a Notice to Co-owner of Debt, along with the garnishee’s statement to them.
Garnishment is successful once the garnishee sends payment to the court. The court in turn deposits the payments into an escrow account. After 30 days, payments are released to a trust fund, held by a collection agency such as CECA. They will disburse the debt payments owed. Unless garnishment is appealed, the debt payments continue.
If concerns arise about a garnishee’s statement, or that debt payments being received are improper, as to the amount or form of payment, a garnishment hearing can be requested. To request a garnishment hearing, a Notice of Garnishment Hearing must be completed and filed with the court. Service of copies on the debtor, garnishee, and co-owner then take place.