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Bank Garnishment without wage garnishment - is this legal?

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databit

Member
What is the name of your state? Tennessee
My mom called me today to tell me her entire check had been garnished. Turns out it was her bank account that was garnished. The debt is to a children's hospital and she has been making monthly payments, as agreed, for the past few years. It is the minimum payment of like $20/month but it is still the agreed upon payment.
Well apparently they took her to court without her knowing (No papers served even via certified mail) and they received the judgment. Took the judgment and contacted her employer. Instead of going for a garnishment on her paycheck they went for a garnishment on her bank account that the employer said the money was being direct deposited too.
Well I did some googling and found United States Code: Title 15, Chapter 41, Subchapter II - § 1673. Restriction on garnishment. From what I understand it says that they can only take up to 25% of her weekly earnings and that have to leave her with 30 times the minimum wage each week.
But if they garnish a bank account they can take the whole thing (up to the debt).
So my thing is (and my law experience pretty much is limited to Google and Boston legal ;) )
If they contacted the company before doing a garnishment to see if she had direct deposit then on the day of the direct deposit had the bank freeze the account, then wouldn't that mean that they are circumventing the laws that are in place to protect her rights?
I figure she has some sort of recourse if she can prove that she wasn't served any papers for the court date and had no idea there was a court date. I just want to know if what they are doing is actually violating her rights.
Because it doesn't seem fair that the law states they can only take $62.50 out of her $250 per week pay (payable every 2 weeks) so instead of taking that route the hit her bank account on the day of direct deposit so that they can get the full $500 (well minus taxes).

Any thoughts?
 


databit

Member
More info:

I just found out another piece of info about this. the $20/month was the court ordered payment and she has been making it to the county clerks office religiously.
 

moburkes

Senior Member
No, they are not circumventing any laws. They can seize the entire bank account or use wage garnishment. Sorry.
 

Ladynred

Senior Member
Seizing her bank account with a levy is NOT the same as wage garnishment and in TN it is NOT subject to any limits except for the amount of the debt owed. If there's not enough in the account the first time around, they'll do it again until they get paid. Garnishment takes too long for most judgment creditors, they'll go for the 'easy' cash first.

There is no 'sewer service' in TN, so they have to attempt to serve you several times and that usually means visits from a Deputy Sheriff. If they can't serve you personally, they can and will mail it to you. Your mother needs to get a copy of the judgment case file and see what the proof of service affidavit says about how, when, where and to whom the summons was served.

She also needs to file her exemptions or the next thing that could happen is a Deputy pulling up with a truck to seize her personal property !
 

databit

Member
Well that sucks.

So it is a legal loophole. The wage garnishment law is there to protect you and leave it so that you can at least afford the basic necessities of life. But with direct deposit I take it you are screwed. *shrugs*

I told her to get a court date and to get all the info on the previous judgment. Doesn't really help her now. Since she doesn't have her bank account I had to spend $30 just to wire her 20 bucks for gas money to make it to work.
But oh well. Thanks for answering my questions.
 

Ladynred

Senior Member
It's not a loophole at all. The difference is wages DUE vs. wages PAID, which is why it's the employer who must deduct the garnishment BEFORE the employee gets their check.

From TN Code:
26-2-102. “Earnings,” “disposable earnings,” “garnishment,” defined. —

As used in this part unless the context otherwise requires:

(1) “Earnings” means the compensation paid or payable for personal services, whether denominated as wages, salary, commission, bonus, or otherwise, and includes periodic payments pursuant to a pension or retirement program;

(2) “Disposable earnings” means that part of the earnings of an individual remaining after the deduction from those earnings of any amounts required by law to be withheld; and
(3) “Garnishment” means any legal or equitable procedure through which the earnings of an individual are required to be withheld for payment of any debt.

26-2-106. Maximum amount of disposable earnings exempt from garnishment — Garnishment costs. —

(a) The maximum part of the aggregate disposable earnings of an individual for any workweek which is subjected to garnishment may not exceed:

(1) Twenty-five percent (25%) of the disposable earnings for that week; or
(2) The amount by which the disposable earnings for that week exceed thirty (30) times the federal minimum hourly wage at the time the earnings for any pay period become due and payable, whichever is less.
(b) In the case of earnings for any pay period other than a week, an equivalent amount shall be in effect.
(c) The debtor shall pay the costs of any and all garnishments on each debt on which suit is brought.
Your mother needs to claim her exemptions:
26-2-114. Procedure for exercising exemption — Notice. —

(a) Should a bona fide citizen permanently residing in Tennessee become a judgment debtor, such debtor must exercise the exemption as provided in § 26-2-103 by filing a list of all the items owned, constructive or actual, which the judgment debtor chooses to declare as exempt, together with the value of each such item. Such listing shall be on oath and filed with the court having jurisdiction. Furthermore, the judgment debtor may modify or amend the listing from time to time as the individual deems necessary.

(b) Such claim for exemption by way of listing, modification or amendment thereto may be filed either before or after the judgment in the case has become final and shall have effect as to any execution issued after the date such claim for exemption is filed. However, subject to such exemption as is further set forth herein, a claim for exemption filed after the judgment has become final will have no effect as to an execution which is issued prior to the date the claim for exemption is filed, and as to such preexisting execution the claim for exemption shall be deemed waived.

(c) It is the duty of the clerk of the court from which process is issued to cause to be stapled to, printed upon or otherwise securely affixed to the warrant, summons or other leading process in the action a typed or printed notice which shall read as follows:

http://michie.lexisnexis.com/tennessee/lpext.dll?f=FifLink&t=document-frame.htm&l=data&iid=23ab36c1.6de5e8cc.0.0&nid=147
Your mother can appeal the bank levy by filing a Motion to Quash with the court but she needs to do it ASAP. Once that's done, she can choose to challenge the judgment itself along with the service of the summons.

26-2-407. Motion to quash execution or garnishment. —
A judgment debtor may assert exemption rights after the service of an execution or garnishment by filing a motion to quash the garnishment or execution. The motion to quash must be filed within the following time periods:

(1) Twenty (20) days from the mailing of the notice required by § 26-2-404 in the event of a levy of execution;

(2) Twenty (20) days from the withholding of wages by a garnishee/employer pursuant to a wage garnishment; and

(3) With respect to any other garnishment, twenty (20) days from the mailing of the notice required by § 26-2-404 pursuant to that garnishment.

26-2-409. Copies of forms to be furnished. —

The University of Tennessee county technical assistance service shall provide clerks of court with forms for judgment debtors to use in filing a motion to quash an execution or garnishment on the ground of exemption rights, in otherwise asserting their exemption rights, or in filing a motion to pay a judgment by installments. Clerks shall provide a copy of these forms to judgment debtors upon request. Nothing herein shall be construed as prohibiting clerks from printing an appropriate form motion to quash on the reverse side of the notices required by §§ 26-2-404 and 26-2-216, so that the judgment debtor may assert applicable exemption rights.
If she can't challenge the judgment, your mother can also ask the court to be able pay the judgment in installments, they call it 'slow pay'.
 

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