Garnishment
Garnishment

GARNISHMENT

Arizona law provides for several “remedies in aid of execution.” This does not mean that Arizona law permits you to execute someone if they don’t pay you what they owe you. What it does mean is that there are several statutory procedures designed to help a person collect a judgment. A judgment is a court order (order signed by a judge) that orders someone to pay money to someone else.

Merriam-Webster’s dictionary defines garnishment as a legal summons or warning concerning the attachment of property to satisfy a debt. One of the Arizona remedies in aid of execution is the “writ of garnishment.” Some states do not permit garnishment, but Arizona does.

Often, a creditor uses a garnishment to take money from your paycheck, but the creditor could garnish bank accounts, accounts receivable if you are in business, shares of stock in a corporation, or, almost anything else which is owed to you.

There are three (3) main forms of garnishment. There is a procedure to garnish wages, called a “wage garnishment.” There is a procedure to garnish a bank account, called a “bank account garnishment.” And, there is a general garnishment procedure that is used to attach (or seize) assets in the hands of a third party that belong to the person who owes you the money, called the “judgment debtor.”

Generally, a judgment must be obtained before you can garnish. There is a procedure, called a provisional remedy, to garnish someone before a judgment is entered but this procedure has so many costs, hurdles, and obstacles that it is not often used in Arizona.

Once a judgment is obtained, a writ of garnishment can be issued if you have a reasonable belief that a third party is in possession of something of value that belongs to the debtor. Arizona garnishment law requires the preparation of about a dozen different documents, some of which must be in both English and Spanish.

The garnishment documents have to be issued by the Clerk of the Court, who requires payment of a fee before stamping anything. A private process server or the County Sheriff then must serve the papers on the person (or entity) being garnished, called the “garnishee.” The papers must also be served on the debtor. Whoever serves the papers (sheriff or process server) must be paid a fee for their service.

The debtor or the garnishee can request a hearing if there is a reason to believe that there is some defect in the garnishment, that money is not owed to the judgment creditor or there is some other reason to object to the garnishment. The garnishee must prepare an answer to the writ of garnishment and must file it with the clerk of the court and also serve it on the debtor and on the judgment creditor. There are specific time periods involved, and if the proper action is not taken within the proper time period, serious adverse consequences may result.

For example, if the garnishee fails to answer the writ of garnishment or fails to answer on time, the Court could enter the default of the garnishee and then enter a judgment that holds the garnishee responsible for payment of the entire judgment obtained by the creditor against the debtor. This could be quite serious.

Imagine if someone obtained a million-dollar judgment against your lazy brother-in-law who supposedly works for you. If a writ of garnishment is served on you and you fail to answer the writ because the lazy slob never showed up for work, the Court could enter your default for failure to answer and then enter a judgment against you making you liable to pay the entire million dollar judgment that the creditor obtained against your brother-in-law.

Similarly, if you have a corporation or a limited liability company and a writ of garnishment is served on the company, if the company fails to answer the writ a judgment could be entered against the company. The result is that the creditor would be able to seize assets owned by the company.

Arizona law permits the garnishment of wages. A wage garnishment is a complicated procedure. Like other forms of garnishment, there are reams of papers to prepare and file. Some of the papers must be in Spanish in addition to English.

The creditor must make an affidavit to the court that it has demanded payment for the amount due and that you have not agreed or continued to pay the non-exempt portion of your wages. This demand is not necessary for the garnishment of property other than wages.

There is a mechanism for the debtor or the employer to request a hearing. Sometimes this procedure is wrongfully used as a stalling or delaying tactic.

Once the wage garnishment is in effect, the employer must pay a portion of the employee’s wages directly to the judgment creditor. The creditor gets a continuing lien on the wages. This means that the creditor does not have to serve a writ of garnishment for every paycheck. One writ does the job.

The maximum amount of a debtor’s disposable earnings for any workweek which is subject to process may not exceed twenty-five percent (25%) of disposable earnings for that week, or the amount by which disposable earnings for that week exceed thirty times the minimum hourly wage prescribed by federal law in effect at the time the earnings are payable, whichever is less.

Reports have to be prepared every quarter and submitted. These reports must show the amount of money withheld from the employee and paid to the creditor. There are penalties to pay if the reports are late or wrong.

Garnishment is also used to reach funds held in a bank account. There are specific procedures for bank account garnishment, just like other forms of garnishment. Depending upon the procedure used, a writ of garnishment might result in the attachment of funds held at a single bank branch office, or might result in the attachment of all funds held in all accounts in every branch of the bank within the same county.

Garnishments do not always result in the recovery of money or property. A wrongful garnishment may result in the wrongdoer having to pay thousands of dollars in damages and attorney’s fees to the people subjected to the wrongful garnishment.

Garnishment is an effective remedy to collect a judgment. The procedure is complex and complicated. A novice should not attempt it. If you are not the kind of person who is willing to perform open-heart surgery on yourself, don’t try to do a garnishment without competent and experienced legal advice.