Collecting Accounts Receivable Part VI: Garnishing a Debtor’s Employer for Salary or Wages

This Blog is Part VI in a series of Blogs designed to provide business owners with a high-level overview of the legal process for collecting on past-due accounts receivables.  Specifically, Part VI focuses on garnishing a debtor’s employer for a portion of the debtor’s salary or wages in order to satisfy the outstanding judgment debt.

The previous Blog in this series focused on garnishing the debtor’s bank accounts; however, the debtor’s salary or wages can also be garnished by issuing what is called a “continuing writ of garnishment” on the debtor’s employer.  The right of a judgment creditor to issue a continuing writ of garnishment on the debtor’s employer is provided in Section 77.0305, Florida Statutes.   This method of post-judgment collections is called a “continuing writ” because a new garnishment proceeding does not need to commence for each new pay period of the debtor.  Regardless of whether the debtor gets paid weekly, bi-weekly or monthly, the continuing writ stays in effect with the debtor’s employer until the entire judgment balance is satisfied.  This is a vast improvement under the Florida Statutes, as prior to 1988, a new writ of garnishment had to be issued to the debtor’s employer for each new pay period.

When an employer receives the continuing writ of garnishment, it must withhold a portion of the debtor’s salary or wages each pay period, sending that portion to the creditor.  Fla. Stat. § 77.0305.   The debtor’s employer is able to deduct a fee for its efforts.  Pursuant to Florida law, the employer can deduct $5 from the debtor’s salary or wages to cover administrative costs for the first deduction and up to $2 for each subsequent deduction.  Id.

Garnishment can only be made on the debtor’s disposable earnings, and the amount that can be garnished is further limited by federal law.  To illustrate, the Consumer Credit Protection Act restricts the amount of garnishment of the debtor’s disposable earnings to the lessor of (a) 25% of each paycheck or (b) the amount by which the disposable earnings for the pay period exceed 30 times the federal minimum hourly wage.  15 U.S.C. §§ 1672(b) & 1673(a).  In case you were curious, disposable earnings are defined as the debtor’s remaining compensation after mandatory deductions required by law, such as taxes.  Fla. Stat. § 222.11.

A judgment debtor is not entitled to a hearing prior to the issuance of a continuing writ, but the debtor is afforded the opportunity to claim exemptions to the garnishment of his or her salary or wages.  The exemption providing the greatest protection to a debtor is that of “head of family.”  Head of family is defined as any one “who is providing more than one-half of the support for a child or other dependent.”  Fla. Stat. § 222.11(1)(c).  If a person enjoys head of family protection, his or her disposable earnings are completely exempt from garnishment.

To claim this exemption, the debtor must file his or her claim of being the head of family within 20 days of receiving the notice of garnishment from the judgment creditor.  If a claim of exemption is made, the creditor can then object to it by filing a sworn statement contesting the exemption.  That objection must be made within three business days if the notice of claim of exemption is delivered by hand or eight business days if delivered by mail.  Fla. Stat. § 77.041(3).

The Florida Statutes do allow for the debtor to waive his head of family exemption if the debtor’s disposable earnings are greater than $750 a week.  Fla. Stat. § 222.11(2)(b).  Good luck getting a waiver of this exemption, although this may come into play, and be a real possibility, if the creditor has gained access to a valuable asset of the debtor, such as a second family car.  The debtor may begrudgingly waive his exemption if it means he gets his asset back.

A continuing writ of garnishment is just one tactic a judgment creditor can use to gain access over a debtor’s assets and/or earnings.  Stay tuned for Part VII of this series, which will focus on another tactic a creditor can use to gain access to a debtor’s income – a charging order issued to a debtor’s business.