Can Your Wages Be Garnished Based on a Default Judgment?
The simple answer to this question is: Yes.
A default judgment is entered by the judge when you fail to appear and contest the collection or other complaint filed against you. Often these complaints are brought to collect unpaid consumer loans, credit cards, child support, taxes, medical bills, title loans, pay day loans and the like.
Once the default judgement is entered, the creditor’s attorney will ask the trial court to issue a wage garnishment order. A wage garnishment is the order that will be delivered to your employer. Once delivered, your employer must withhold your wages as directed by the order and pay them over to the creditor. The practical result is that your pay check will then be a fraction of your normal pay.
Is there a difference between a Default and a Default Judgment?
The technical answer is: Yes.
In most courts, especially small claims, the procedure for obtaining a default judgement involves two steps. The first step is when the creditor enters a default against the debtor defendant because the defendant failed to answer the collection complaint after being properly served. The second step is when the court actually enters the default judgment.
The difference can be significant. If a default has been entered against you, you can file a Motion to Set Aside Default. The grounds for doing so are very liberal and include basic things like mistake, neglect, confusion, misunderstanding, etc. – basically, my dog ate my homework. All doubts are construed in your favor based on the court’s policy of favoring a trial on the merits. The granting of these motions is virtually automatic.
If a “default judgment" has been entered against you, you can still file a Motion to Set Aside Default. The same policy of favoring a trial on the merits will work in your favor. Usually the Motion will be granted unless you knew about it and intentionally failed to answer, and then changed your mind. Also, many states put a hard time limitation on bringing such Motions, such as six months, regardless of your excuse.
When and Why is a Default Judgment Entered?
A default judgment is a judgment entered by a court after an entry of default against the defendant for failing to timely appear in the case. Failing to appear means failing to file a proper legal pleading with the court – such as failing to answer the complaint or challenge the complaint with a legally valid pleading of some kind such as a demurrer, motion to dismiss, motion to strike, or the like. Put another way, the Court may enter a default judgment against a consumer in favor of the debt collector or creditor if the consumer fails to show up and defend himself in a timely fashion.
In the world of garnishment, a default judgment is always in the form of a money judgment. The total judgement typically includes the amount of the unpaid debt, accrued interest, penalties, court costs and sometimes an added amount for the creditor’s attorney’s fees.
Since many of these matters can be resolved in court or on the courthouse steps, it is always best to show up and defend yourself, even if you admit you owe the debt.
How Quickly After the Default Judgment is Obtained may Garnishment Begin?
If the creditor knows the name and address of your employer, the order can – and usually will – be served (or delivered) to the employer immediately. Your next pay check will then be garnished to the full extent allowed by law, often up to 25% of your gross pay.
Many times the creditor does not know the name of your employer. In that case, the creditor’s attorney does not know who to serve with the garnishment order. However, that problem can be remedied very easily. All the creditor’s attorney must do is serve you with an Order of Examination.
An Order of Examination (“AOE") will command you to appear (usually at the office of the creditor’s attorney) for an examination under oath (similar to a deposition). At the AOE, the creditor’s attorney will ask you under oath about all of your sources of income and assets, including the name and address of your employer, your exact banding information, etc. Usually garnishment immediately follows.
If your current employer is listed on your credit report, the creditor won’t even need to examine you for that information. Likewise if you current employer is listed on social media such as LinkedIn or Facebook, the Creditor can find it right away.
Will Filing a Motion to Set Aside Default Automatically Stop a Garnishment?
No. When you file a Motion to set aside a default, the court clerk will give you a hearing date. Normally if your wages are already being garnished, this will not in itself stop the garnishment. If at the hearing the Court rules in your favor and sets aside the default or default judgment, at that time you should immediately provide a copy of the court’s order to your employer and anyone involved in the collection process. Garnishment should then cease immediately.
All of these rules on default and garnishment vary from state to state and county to county. Be sure to check the rules or consult qualified counsel to guide you through.
Minnesota Attorney General – http://www.ag.state.mn.us/consumer/publications/Garnishment.asp
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