Bank Levies and Wage Garnishments
When a creditor sues you and obtains a judgment for unsecured debts such as credit card debt, the next step is for the creditor to collect on that judgment. In California, the easiest ways for a creditor to collect on a judgment are to garnish your wages or levy on your bank account. If your creditor has done some research on you, they likely know where you work and possibly where you bank. It’s not that difficult for them to find out. So let’s take a look at what happens here and how you can fight back against these collection methods.
The judgment creditor can ask the Court to issue a writ of execution, which will be delivered to your bank by a sheriff. The sheriff then seizes the funds in your account for up to the amount stated in the writ, which will usually include attorney’s fees, costs and post-judgment interest. Think of this as a one-shot deal per writ. They cannot continue to levy in the future under that one writ. But they can get multiple writs issued over time to levy on your bank account until the judgment is fully satisfied. Most people don’t realize this has happened until their debit card gets denied at the register.
Much like a bank levy, a creditor with a judgment against you can have documents served on your employer to garnish wages. California law states that a judgment creditor can garnish up to 25% of your wages until a judgment is paid in full. Your employer cannot ignore this and must garnish your wages as mandated by the writ. The only bright note is that your employer is not permitted to terminate you simply because your wages are being garnished.
Your Potential Remedies
Either of these collection efforts can be financially crippling. Once the sheriff seizes funds from your bank or your employer receives notice to garnish your wages, the clock is ticking for you to take action. There are mechanisms in place to reduce the levy or garnishment.
The Court will permit you to file a claim of exemption to either reduce or eliminate the financial hit you have taken on a bank levy or wage garnishment. For instance, on a bank levy, you can claim an exemption of up to 75% of income from employment earned within the 30 days prior to the bank levy. If you can prove that the money seized by the sheriff is from income received within the last 30 days, the Court can order the sheriff to refund that 75% to you. The idea here is that the Courts don’t want to bankrupt you to satisfy the debt. They recognized that there are certain necessities of life and the Court will not deprive you of that. But you must take action within the timeframe permitted by law. Typically the same applies on a wage garnishment. If you can prove to the Court that your wages are needed for the basic necessities of life, your garnishment can be reduced or eliminated.
The key is not to wait too long to fight back. If you miss your deadlines to oppose a garnishment or levy, that money held by the sheriff is gone and you’ll never get it back. But, by taking swift action you can reduce or eliminate these judgment collection efforts. Today I helped a client get back 75% of a paycheck after the bank levied on their account on a payday. They originally thought that money was lost forever. I’m just glad they took quick action to retain me so I could fight for them.
As always, I suggest that if this process seems too intimidating for you, seek the assistance of an attorney with experience handling unsecured debts. You deserve an honest opinion on all of your options when facing collection on a judgment. In some instances, it may be best to consider bankruptcy. If that’s not a good option for you, it may be possible to negotiate a settlement with your judgment creditor. Everyone’s circumstances are different and you should know your options.