Garnishment of bank balance

[jimmy7]

What is the name of your state (only U.S. law)? Florida

I have read the earlier thread on “Tenants by the Entirety” in this forum. I am in a similar situation but I am facing a civil lawsuit from my former friend. I am preparing for the worst possible scenario.

I have a property that is owned jointly by me and my wife and it is protected by Tenancy by the Entirety. We receive around 5K rent from that property per year.

I have a job and receive monthly salary. I put my salary and the rent from that property in one or more bank accounts that are on my name or my wife’s name (the accounts are not created as tenancy by entirety. We moved money between these accounts). I have no other source of income except my salary and the rent. My wife has no job for the last several years and she depends on me for financial survival. We have a dependent child. I read Florida law 222.11 on Exemption of wages from garnishment. I provide more than one-half of the support for my child and wife and I did not waive this protection ever. Now my questions are

(1). Whether the former friend or court can take away my (or my wife's) current or future bank balance?

(2). If YES then which portion of the bank balance he/court can take away (rental part or my salary)?

(3). Every month, I spend some money (for groceries, cloths, car insurance, etc), from the bank accounts, for me and my family survival. That money I spent (and will spend) be counted as if I am spending the rental income or my salary or both?

Any additional information on how to protect my (or my wife's) bank balance is highly appreciated.

 

[justalayman]

the amount covered under the head of household exemption speaks to disposable income over $750 per week. Money under $750 a week is protected already.

(2)(a) All of the disposable earnings of a head of family whose disposable earnings are less than or equal to $750 a week are exempt from attachment or garnishment.
(b) Disposable earnings of a head of a family, which are greater than $750 a week, may not be attached or garnished unless such person has agreed otherwise in writing. The agreement to waive the protection provided by this paragraph must:
1. Be written in the same language as the contract or agreement to which the waiver relates;
2. Be contained in a separate document attached to the contract or agreement; and
3. Be in substantially the following form in at least 14-point type:

then while your earnings are protected under that section, the protection is limited to 6 months.

(3) Earnings that are exempt under subsection (2) and are credited or deposited in any financial institution are exempt from attachment or garnishment for 6 months after the earnings are received by the financial institution if the funds can be traced and properly identified as earnings. Commingling of earnings with other funds does not by itself defeat the ability of a head of family to trace earnings.

(1). Whether the former friend or court can take away my (or my wife's) current or future bank balance?

that is fact dependent but at some point the answer is yes. Especially if more than $2500 (minus 1/2 the costs attributable to the rental) is deposited in your wifes accounts. Then it suggests you are attempting to fraudulently protect your money which can allow a court to allow the seizure. Given you feel you need to protect that money a court can determine none of it is protectable funds otherwise you would not have taken actions to hide it.


I suspect the money withdrawn will be calculated on a ratio equal to the source of the deposits but not anything close to certain on that.

 

[jimmy7]

Thanks for all the details.
The Nolo law dictionary is stating the following (I provided the complete information from Nolo at the end of this message):
Florida Head of Family exemption: Florida law does provide an exemption which is specific to wage garnishments. This exemption is not automatic and must be claimed by filing an affidavit with the Court when you are notified that the creditor intends to request a wage garnishment. If you properly claim the exemption, your wages cannot be garnished by a judgment creditor if you are head of the family and your wages are $750 per week or less. If you are a head of family and your wages exceed $750 per week, they can only be garnished by a judgment creditor if you have agreed in writing that the creditor can garnish your wages. To qualify as head of family, you must provide more than one half of the support for a child or other dependent.

Nolo did not say anything about the six months limit. I have also contacted an attorney and he also supported what I read in Nolo. Can someone help me on this?

About transfers between my account and my wife’s account: we have no fraudulent intentions and my wife is ready to move that money back at anytime to my account if the court asks. Does it still be counted as fraudulent? If so, is it better to move that money back to my account now?

Finally, where (in which accounts) I need to keep my future salary and future rents to make sure that they are not treated as fraudulent transfers?




Complete information from NOLO:

What Is a Wage Garnishment?

A wage garnishment or wage attachment is an order from a court or a government agency that is sent to your employer. It requires your employer to withhold money from your paycheck and send this money directly to your creditor.

Different garnishment rules apply to different types of debt -- and there are legal limits on how much of your paycheck can be garnished.

To learn more about how wage garnishments work, how to object to a wage garnishment, and more, see our Wage Garnishment and Attachment topic.
When Can a Creditor Garnish Your Wages in Florida?

Most creditors cannot get a wage garnishment order until they have first obtained a court judgment stating that you owe the creditor money. For example, if you are behind on credit card payments or owe a doctor’s bill, those creditors cannot garnish your wages unless they first sue you and get a judgment.

There are a few exceptions to this rule. Your wages can be garnished without a court judgment for:

unpaid income taxes
court ordered child support
child support arrears, and
defaulted student loans.

Limits on Wage Garnishment in Florida

There are limits to how much money can be garnished from your paycheck. The idea is that you should have enough left to pay for living expenses.

Federal law places limits on wage garnishment amounts. While states are free to impose stricter limits, Florida has not done so. That means the federal law governs in Florida.
Here are the rules:

A creditor can garnish 25% of your disposable income or the amount by which your disposable income exceeds 30 times federal minimum wage, whichever is less. In Florida, if your disposable income is less than 30 times federal minimum wage, your wages cannot be garnished at all.

"Disposable earnings" are those wages left after your employer has made deductions required by law. Examples of legally required deductions are federal, state and local taxes, social security and the employee portion of state unemployment compensation insurance. Deductions that are not required by law do not count to reduce your disposable income. These include union dues, life and health insurance and most retirement plan contributions.
Here are some examples of garnishment situations:

Alex only works part-time. He makes $200 per week. This is less than 30 times federal minimum wage. A judgment creditor cannot garnish his wages.

Jose works full-time and takes home $1,200 per week after taxes. A judgment creditor could garnish Jose’s wages up to $300 per week. This represents 25% of Jose’s disposable income.

Casey works part-time and takes home $280 per week after taxes. Assuming federal minimum wage is $7.25 per hour, a judgment creditor can garnish $62.50 per week from Casey’s wages. This is less than 25% of Casey’s disposable income but is the amount by which Casey’s disposable income exceeds 30 times federal minimum wage.
Florida Head of Family exemption

Florida law does provide an exemption which is specific to wage garnishments. This exemption is not automatic and must be claimed by filing an affidavit with the Court when you are notified that the creditor intends to request a wage garnishment. If you properly claim the exemption, your wages cannot be garnished by a judgment creditor if you are head of the family and your wages are $750 per week or less. If you are a head of family and your wages exceed $750 per week, they can only be garnished by a judgment creditor if you have agreed in writing that the creditor can garnish your wages. To qualify as head of family, you must provide more than one half of the support for a child or other dependant.
An example using the exemption:

Jose is married and supports his wife and child, providing more than one half of their support. He works full time and takes home $1,200 per week after taxes. He has not agreed in writing to any garnishments. If Jose claims the head of family exemption, a judgment creditor cannot garnish his wages.

 

[justalayman]

Nolo did not say anything about the six months limit. I have also contacted an attorney and he also supported what I read in Nolo. Can someone help me on this?

you don't believe the section of the actual statute I provided?

(3) Earnings that are exempt under subsection (2) and are credited or deposited in any financial institution are exempt from attachment or garnishment for 6 months after the earnings are received by the financial institution if the funds can be traced and properly identified as earnings. Commingling of earnings with other funds does not by itself defeat the ability of a head of family to trace earnings.

About transfers between my account and my wife’s account: we have no fraudulent intentions and my wife is ready to move that money back at anytime to my account if the court asks. Does it still be counted as fraudulent? If so, is it better to move that money back to my account now?

Finally, where (in which accounts) I need to keep my future salary and future rents to make sure that they are not treated as fraudulent transfers?

The claim it is fraudulent allows the creditor to seek its seizure even though it is in your wife's account. It doesn't mean you will get into trouble for the actions (necessarily) but it does mean it may not be safe if the court determines the money in her account would otherwise be eligible for seizure.

and the court will not ask her to move the money back to your account. If determined to be eligible for seizure, the court will simply allow the creditor to take it (through the legal channels of course) and in doing so, it may end up with more being taken than you believe should be.


It is always best to avoid commingling money where some is protected from seizure and some not. It means in the end you would have to prove the protected money is in fact the protected money if it is commingled with other, not safe, funds. That isn't always the easiest thing to do.

 

[jimmy7]

Thanks again for all the details.

about six months time limit: no where it says that the funds can be taken away after 6 months. What I understood is that even if the funds are identified for garnishment, still the funds cannot be garnished for 6 months (may be I am wrong but would like to get a clarification).

 

[Proserpina]

Thanks again for all the details.

about six months time limit: no where it says that the funds can be taken away after 6 months. What I understood is that even if the funds are identified for garnishment, still the funds cannot be garnished for 6 months (may be I am wrong but would like to get a clarification).

The implication being that there's no law saying they can't take the funds after 6 months.

Very often the law isn't about what you can do, but what you can't do.

 

[justalayman]

about six months time limit: no where it says that the funds can be taken away after 6 months.

it says this:

(3) Earnings that are exempt under subsection (2) and are credited or deposited in any financial institution are exempt from attachment or garnishment for 6 months after the earnings are received by the financial institution if the funds can be traced and properly identified as earnings.

is there something in: exempt... for 6 months....that is not understandable?

and earnings that are exempt under subsection 2:

(2)(a) All of the disposable earnings of a head of family whose disposable earnings are less than or equal to $750 a week are exempt from attachment or garnishment.
(b) Disposable earnings of a head of a family, which are greater than $750 a week, may not be attached or garnished unless such person has agreed otherwise in writing. The agreement to waive the protection provided by this paragraph must:
1. Be written in the same language as the contract or agreement to which the waiver relates;
2. Be contained in a separate document attached to the contract or agreement; and
3. Be in substantially the following form in at least 14-point type:

in other words; once they are in the bank for more than 6 months, the court is not going to entertain any argument they originally were exempt funds and treat them all as non-exempt funds. additionally, if less than 6 months and questioned, you would have to prove they were in fact exempt funds.

What I understood is that even if the funds are identified for garnishment, still the funds cannot be garnished for 6 months (may be I am wrong but would like to get a clarification)

if they are exempt funds, they are safe for 6 months after deposit (if you can prove they are in fact exempt funds). Otherwise the money is eligible for seizure.

 

[jimmy7]

Thanks again for all the details.
It seems Section 77.041 of Florida Statutes protect the wages for Head of House hold.

 

[justalayman]

Thanks again for all the details.
It seems Section 77.041 of Florida Statutes protect the wages for Head of House hold.

I'm not seeing it. That statute deals with the execution of the garnishment.

the only time head of anything is mentioned is here:

CLAIM OF EXEMPTION AND
REQUEST FOR HEARING



I claim exemptions from garnishment under the following categories as checked:
_____ 1. Head of family wages. (You must check a. or b. below.)
_____ a. I provide more than one-half of the support for a child or other dependent and have net earnings of $500 or less per week.
_____ b. I provide more than one-half of the support for a child or other dependent, have net earnings of more than $500 per week, but have not agreed in writing to have my wages garnished.

that is the form you would fill out when you receive the writ of garnishment to make a claim that some of your earnings are exempt. The other statute is the law that actually specifies what is exempt due to being head of family and we already went over that one.

 

[jimmy7]

Thanks again.

If I select either 1a or 1b (based on my wages per week) AND the court determines that what I said in that claim of exception is correct then those wages (including past wages that are in bank AND the future wages that I earn) are exempted from garnishment. Is it correct? Please clarify.

By the way the exemption is $750 per week (it is changed from $500 per week to $750)

 

[justalayman]

If you put them in a bank the exemption is limited to 6 months. I saw nothing that limited the exemption if you did not deposit the money somewhere. Seems like the phrase: cash is king is appropriate here.

 

[jimmy7]

Thanks again.

I did not understand why this head of family status is a great option if it protects wages only for 6 months.

 

[jimmy7]

Thanks again.

I read your message carefully and I liked the phrase "cash is king".

I wish to withdraw the money from the bank and keep the cash (bury the jar in backyard!). Please let me know if I am making things worse for me by doing this.

 

[I'mTheFather]

Yes, that will probably cause problems. Also, be aware that the plaintiff will have the opportunity to challenge your claim of exemption in court.

 

[Just Blue]

Thanks again.

I read your message carefully and I liked the phrase "cash is king".

I wish to withdraw the money from the bank and keep the cash (bury the jar in backyard!). Please let me know if I am making things worse for me by doing this.

If you hide money you will likely get in trouble. They might "dig up your yard". Just pay your debt.