All creditors share one thing in common: they are owed money. Many creditors are large companies: credit card issuers, retailers, service providers, educational institutions, various government departments. Other creditors are small companies or individuals. Though details vary from state to state, for all creditors, the general process (the 10 basic steps) for garnishing someone’s wages or bank account, is the same. So here they are listed – How to obtain a garnishment order – when you are the creditor.
Step #1: Demand
Virtually all states require that the creditor make a demand “for money owed" as a precondition to perfecting his or her claim. This demand can be in the form of a bill, invoice, letter, email, or the equivalent. The demand should be for a sum certain (e.g., $2,023.42), representing exactly what is owed (or as close thereto as possible). If interest and penalties are due, those should be demanded as well, provided they are lawful under the laws of applicable state.
Step #2: Non-Payment
Sometimes the debtor pays when a final payment is demanded. If so, case closed. But if full payment is not forthcoming, i.e., if no payment at all is made, or if only partial payment is made, the best practice is to confirm this in writing. Ideally, you will send a written affirmation that both the demand was made and that payment in full was not received in a timely fashion, such that it is now past due or in default.
Steps #3 & #4: File and Serve Summons & Complaint
Generally speaking, when voluntary collection efforts fail, your only resort is filing a lawsuit. Lawsuits to collect unpaid monetary debts are generally called “collection lawsuits”. If you don’t want to do it yourself, you can sell or assign your debt at a discount to a collection agency. Most such agencies only deal on volume, so if you don’t have volume, you won’t likely be able to go that route.
If you do it yourself, you have two fundamental choices: you can hire an attorney or represent yourself. If you hire an attorney, you’re best to follow his or her advise. If you are an entity, i.e., a corporation, LLC, or limited partnership, you have no choice but to hire an attorney. Even if you are a sole proprietorship, you cannot represent an entity as the law considers the entity to be a person, and you, as a non-lawyer, cannot practice law. If you are just a dba, however, or if you are acting individually, you can represent yourself, so long as you are the one the company is “doing business as”.
Going in pro per, as it is called when you represent yourself, requires attention to the details of all relevant local court rules. Small cases where sums under $25,000 are involved (this varies from state to state), can usually be filed in Small Claims court. This is the quickest and cheapest route. All other claims must be filed in Municipal or Superior Court. When you file, you should obtain and follow the instructions set forth on the local forms. In most states, all of these forms are accessible online.
The pleading you will file is called a Complaint, which sets forth your demand for money due and unpaid and/or for breach of contract. You will file both the Complaint and a Summons with the Court for a small filing fee, usually several hundred dollars. You will then serve (or hire a processor to serve) the Complaint and Summons on the debtor. The best way for service to be effected is by personal service, i.e., putting the document directly into the person’s hands. In most states, just mailing the documents (via snail mail or email) won’t work unless the debtor signs a formal Acknowledgment of Service, which most debtors will not do.
Steps #5 & #6: Answer, Motion for Default Judgment, Default Judgment
Once served, the debtor will have a set time to Answer, usually 20 to 30 days. An Answer, like the Complaint, if often a simple form, and it sets forth factual denials and affirmative defenses. If the debtor does not timely Answer, you can then file a Motion for Entry of Default Judgment. As with the Complaint and Answer, there are also forms for filing a Motion for Entry of Default. Again, be sure to follow the guidelines to the letter, as most Judges are sticklers when it comes to taking a debtor’s default given the serious consequences involved (not the least of which is that his or her wages can then be garnished).
Once you file for a Default Judgment, a hearing will be set, usually 20 to 30 days into the future. You’ll appear at that hearing, always early (early is on time in the legal system) and there you will “prove up" to the Judge that you are owed a certain sum of money, that the debtor has not paid it in full after demand, that you have filed and served a Complaint and Summons, and that, as the Judge will be able to ascertain from the file (which will be in front of him or her), the debtor has not answered, i.e., has defaulted.
Once you’ve done all that, the Court will enter a default judgment in your favor for the amount owed, usually with past due interest.
Step #7: Application for Garnishment Order
If you are smart, and local court rules allow it, you’ll apply for a garnishment order in the amount of the judgment at the same hearing where you obtain your default Judgment. In other words, you’ll get it all done at once. If the rules don’t allow it, or the Judge prefers it, you will be asked to return on a later date to obtain your Garnishment Order. In many situations, depending on the customs of the state and county involved, the Judge will issue you both the Judgment and the Garnishment Order at the same time.
Even if the debtor answers and appears at the hearing or trial, if you are right and have the proof of demand and non-payment, the Judge will enter Judgment and issue a garnishment order at your request. At that time, and often before the hearing commences, the debtor (obviously, assuming he attends) will be inclined to make an arrangement with you to avoid entry of Judgment and subsequent garnishment. For a good summary of California garnishment laws, see here. There are also other state garnishment laws listed in our menu section on US State Garnishment Laws.
At that time, you will have several choices, but usually some form of immediate payment is involved. A word of caution: do not dismiss your case until you are paid in full. Ask the court if you can continue the hearing until full payment is made, or get a Stipulated Judgment and Garnishment Order which can only be served by you on the debtor should he or she fail to honor the payment arrangement.
If at all possible, do not dismiss the lawsuit until the debt is paid to your satisfaction. If you do, and future payment is not forthcoming, you will have to start all over.
Step #8: Service of Garnishment Order on Third Party
Now that you’ve obtained your Garnishment Order, you must serve that order on the third party that has the debtor’s money, as well as the debtor. Usually that is either an employer or a financial institution. Of course, the tricky thing is that, in order to serve the Garnishment Order, you must know where the debtor is employed and where he or she banks. If you do know, then that third party will have a legal obligation to promptly honor the garnishment order once service is effected.
As crazy as it seems, the debtor could default on the collection lawsuit, allowing Judgment to be entered, and still contest issuance of the Garnishment Order. So be prepared for that. Various defenses are available under both federal and state laws, all of which are covered in other articles posted on this website, but they include: alleged exemptions to garnishment, proof that the debtor has filed for bankruptcy, proof of other garnishments which take precedence to your debt, proof that the garnish amount requested is excessive in light of federal and state law, etc.
For a good summary of federal garnishment law, see the U.S. Labor Department, Wage and Hour Division Fact Sheet: https://www.dol.gov/whd/regs/compliance/whdfs30.pdf.
Steps #9 & #10: Compliance with Garnishment Order and Receipt of Money
If none of the foregoing are asserted, then the third party – employer or financial institution – is legally obligated to follow the directions in the Garnishment Order. This is not an option that the garnishee (the employer or financial institution) can accept or reject. Federal and state laws require compliance with any lawful garnishment order. If the garnishee plays games, it could very well have to pay the amount of the garnished debt itself. In other words, in most cases, the third party will garnish the amount in question and pay you directly without delay or incident. Payment will continue until your debt is paid or as long as the order allows under the law of the state where the order was obtained.
Recap & Conclusion
The foregoing has been a general summary of the law as it relates to obtaining a garnishment order against a debtor who defaults on a debt. Here again are the 10 basic steps involved:
- Demand payment of the debt;
- Affirm non-payment or default;
- File Complaint and Summons;
- Serve Complaint and Summons;
- Take Debtor’s Default or prove debt owed at the hearing/trial;
- Obtain Default Judgment if no answer or Judgement if contested;
- Apply for Garnishment Order;
- Serve Garnishment Order on Third Party;
- Compliance with Garnishment Order;
- Receive garnishment payments until paid to satisfaction.
Remember that every state has its own state and local rules. In this area of the law, attention to detail is extremely important, so be sure to have your ducks in order: written proof of everything is always the best advice.