For the citizens of the state of Oklahoma, the problems and concerns of personal debt are no different than those of the citizens of other states. The real estate crash, a sluggish economy, high unemployment in many job sectors, the burdens of international conflict – all trickle down to everyday lives.
More often than we’d like to hope, this results in personal debt accumulation. Child and spousal support, federal and state taxes, student loans, and credit cards can all add up, eventually hitting the tipping point. When that happens, garnishment of wages and bank accounts can follow.
Very often there are steps you can take to avoid or mitigate the impact of the garnishment process, especially if you act with knowledge and diligence to protect your rights. So let’s discuss what these garnishments are, and how you can address them under the specific provisions of federal law and the laws of the state of Oklahoma that apply.
Types of Garnishments in Oklahoma
Garnishments take place at the state and local level, even where a federal income tax or other debt is involved. Generally speaking, a garnishment is simply the process of a creditor attaching your wages from your pay check or the money in your bank account. The attachment is then applied to your existing debt, and of course collects any interest and penalties due as well.
The creditor can be anyone: an ex-spouse, federal or state tax authorities, credit card companies, collection agencies, utility companies, medical providers or public or private lenders (for student loans, real estate loans, auto financing, personal obligations between private individuals, you name it). Anyone to whom you become obligated can, in the event of default, purse a garnishment to satisfy the debt owed, usually by first filing a lawsuit against you and obtaining a money judgment.
The state of Oklahoma recognizes two basic types of garnishments, each with its own personality so to speak and own set of procedures and exemptions. One is referred to as a “continuing garnishment." This is usually a garnishment for wages from your pay check or other source of ongoing income. It continues until the debt is paid or the law forces it to stop. The other is, conversely, a “non-continuing" garnishment. This is usually a one-time attachment of the money in one or more of your bank accounts.
Note that Oklahoma, unlike most other states, treats the terminology of child support and spousal support or maintenance differently in terms of the garnishment process. In fact it does not call the enforcement process for these debts a garnishment. Instead it describes the process as “income assignments" or “wage withholding" orders. The distinction between the two is set forth in detail in the applicable Oklahoma statute, OK Statute, Sections 12-1171 et seq.
Oklahoma law draws a further distinction between garnishment of wages and income assignment. Both allow the creditor to reach and deduct money from the debtor’s pay check. However, garnishment is unique as a non-voluntary process by which the debtor employee’s wages are withheld by the employer and paid over the creditor, usually preceded by the filing of a lawsuit from the creditor and obtaining of a money judgment. By contrast, the assignment of wages by a debtor employee is voluntary, usually as an agreed solution to an existing debt issue, and usually in lieu of litigation.
How Oklahoma Garnishment Matters Usually Get Started
Most Oklahoma garnishment matters get started with the filing of a civil lawsuit by the creditor against the debtor in state court. Like any other lawsuit, a complaint is filed by the creditor’s attorney and served on the debtor. Once the debtor is served, he or she has the right and opportunity to respond to the complaint. The response can raise defenses that preclude recovery of the debt altogether, or which limit (and exempt) certain amounts from recovery.
Statute of Limitations
It is quite common for creditors to pursue litigation as a last resort, with a resultant delay between the time the debt was due and the time the lawsuit to collect the debt is filed. Sometimes this can be an extraordinary delay of many years.
In Oklahoma, a creditor suing to collect the debt due on a written contract must file its claim within five years of default. A creditor suing on a verbal or implied debt must do so in the shorter time period of three years. How the courts will treat consumer credit card agreements is unclear.
When a claim is filed late, beyond the statutory period, it is deemed time-barred. In ordinary parlance, this means the creditor is prevented from collecting the debt, including interest and penalties, because it waited too long to file. By “sitting" on its rights, the right to collect a debt otherwise owed was lost.
Special Considerations for Consumer Debt
It used to be that credit card and other consumer creditors would go to court to collect their debts with shoddy or insufficient evidence that the debt claimed was actually due and owing. Because many debtors lacked sufficient knowledge or resources to oppose the cases, default judgments nonetheless entered against them.
In response to the resulting unfairness, the Oklahoma courts have cracked down on creditors who want to sue to collect their debts. Before a creditor can obtain a default judgment, it must now come up with the actual credit card agreement that applies to the debt in question, and that the consumer actually agreed to pay or be bound of the debt asserted. A simply collection demand letter is not enough.
If the creditor cannot present the right proof of debt, today the Oklahoma courts will not give the creditor a money judgment against the debtor. This means a wage garnishment order will not be forthcoming. As with a claim barred by the statute of limitations, a claim unsupported by evidence will thus not support a debt collection.
Exemptions to Garnishment in the State of Oklahoma
As in other states, Oklahoma recognizes that certain debts should be exempt from wage or other garnishment based on considerations of public policy. There are a variety of exemptions, but it is the debtor’s obligation to establish that a particular exemption applies to him or her, and to what extent.
Preliminarily, one exemption unique to the state of Oklahoma is what might be called “the 75% rule." Under this rule, 75% of all wages earned by the debtor over the 90 days preceding the garnishment cannot be touched, except for child support payments. This portion of the debtor’s wages is automatically off limits.
Options Available to a Debtor in Oklahoma When Faced with a Garnishment
Generally speaking, the options available to a debtor in the state of Oklahoma when faced with a wage garnishment are as follows:
- Show that your wages, or some part of them, are exempt from garnishment or attachment;
- Seek protection, to the extent it is available, from the federal bankruptcy courts;
- Make sure that the creditor only enforces one garnishment order at a time, which is the debtor’s right (with the single exception of child support); and
- Present proof to the court that issued the garnishment order that the garnishment, or some portion of it, will cause you and/or your family undue hardship.
Amount That Oklahoma Law Permits to Be Garnished from Your Wages
Following the lead of the federal law, the state of Oklahoma limits the amount of wages that can be garnished from a working debtor. With a few exceptions for child and spousal support and delinquent taxes, the most that the creditor can garnish is 25% of the salary that is paid to you after deductions mandated by law.
Another calculation is to determine 30 times the federal minimum wage (currently $7.25 per hour) per week, which is $217.50. The creditor cannot reach or garnish that amount or 25% of your wages, whichever is less. A further unique garnishment limitation in Oklahoma is that, regardless of which formula is applied, you must be allowed to keep at least $217.50 per week or $870 per month after those same deductions. For part-time workers, this often means very little can be touched.
The Oklahoma Hardship Exemption for Wage Garnishments
For many people the garnishment of their wages to the extent allowed by law would put them or their families on the streets, cause their utilities to be shut off, or leave them without enough food to survive. The state of Oklahoma does not want this to happen, so it provides debtors with a hardship exemption from garnishment.
Generally speaking, the debtor must prove he needs his entire pay check to pay essential bills. However, there are some very specific time frames, hurdles and details that must be addressed.
- A debtor only has five days from notice of garnishment to apply to the court for a hardship exemption. This is a very strict time limitation.
- A specific form must be filed in this 5-day time frame. It is called a Claim for Exemption and Request for Hearing. A letter or phone call to the judge’s clerk is not enough. Thankfully, your employer is obligated to provide this very form to you when it informs you of the garnishment.
- If for some reason you miss that five-day time frame, you still can file a Motion under the same name.
- On your Claim Form, you will need to accurately fill in all the requested information under penalty of perjury. This will include such things as the size of your family, your essential budget and any money currently on hand. You will file this with the court and provide a copy to the creditor’s attorney.
- At the hearing that will be held, you will need to provide proof of the information listed on your form, so bring as much documentation as you can put together.
- The Judge will consider what it takes for you to survive in terms of your fundamental needs, including your residence (shelter), food, transportation, et cetera.
- If the Judge determines that an undue hardship exists, he can exempt all or part of your take-home pay from garnishment.
The Oklahoma Hardship Exemption for Non-Continuing Garnishments
Recall that non-continuing garnishments are those one-time attachments to such things as the money in your bank account. Generally speaking, all the same requirements apply here.
Duration of Garnishment Orders in Oklahoma
In Oklahoma, wage garnishments stay in force for the lesser of the following: (1) satisfaction of the debt, or (2) the lapse of 180 days (or about six months) from the date the garnishment process started.
Priority As Between Different Kinds of Oklahoma Garnishment Claims
Some debtor employees are saddled with more than one garnishment order. Oklahoma follows a first-in-time, first-in-right rule when it comes to garnishment priorities. With the exception of child support, which always receives number one priority, the employer must honor garnishments in the order in which they are received.
Many employers do not like the hassle of dealing with garnishment orders. Some, especially the smaller ones, might prefer the easier alternative of terminating the employee. Oklahoma follows the federal law here, making such terminations unlawful.
When it is all said and done, garnishment can be a difficult and tricky process for all concerned, from creditor to employer to employee. It behooves all to engage a qualified professional to address the myriad issues that may arise, whether legal counsel, CPAs or other specialists.
Duration of Garnishment: Okla. stat. tit. 12, §§ 1171, 1173.4.
Undue Hardship Exemption: 15 U.S.C. § 1673; Okla. stat. tit. 31, § 1.1.
State Statute – Garnishment: Oklahoma Code Sections 14A-5-105 and 31-1(A)(18)
Public Law 99-150, enacted on November 13, 1985, amending the Fair Labor Standards Act
Title II of the Consumer Credit Protection Act, 15 U.S.C. Section 1671 to 1777) – applies to all garnishment orders