Wage garnishment in Alabama is a remedy available to creditors—which means that it is a way that creditors, or people who are owed money, can look to collect from debtors, or people who owe them money, who do not voluntarily pay. Specifically, wage garnishment is when a creditor has the right to have part of the debtor’s wages or salary sent to the creditor, to satisfy the debt.
One common misconception about garnishment is that a creditor can do this on its own. It can’t; a creditor (other than a tax authority, like the IRS) needs a court order to garnish wages, and to get that court order, it first needs a judgment in its favor. That means that the creditor has to sue the debtor and win, to establish its right to the money.
Garnishment is available for any debt, including debts resulting from professional malpractice, auto accidents, breach of contract, or other lawsuits. Its most common usages are for consumer debts (including credit cards), alimony and child support, or taxes.
States have the right to establish their own exemptions to garnishment, or to carve out types or amounts of income which cannot be garnished. Alabama, like many states, has largely declined to do this. For most part, Alabama follows federal law on the subject. This means that almost every form of income can be garnished. The few exceptions are:
However, apart from those limited exceptions, any income—including pensions from private companies (for anyone lucky enough to still receive one!)—can be garnished.
Alabama’s following the federal lead in garnishment extends to it following the federal rules for the maximum amount garnished. Under federal law, the lesser of the following may be garnished:
The second criteria is fairly straightforward: in order to allow the debtor something to live on, he or she gets to keep the equivalent each week of working at least 30 hours at minimum wage.
What does the first criteria mean, though? To most people, “disposable income” is income left over after all required expenses, including food and housing—it’s more or less synonymous with the money a person has left for either savings or fun, depending on their inclination. The law defines it much more strictly, however: disposable income is income left after legally required deductions from a person’s paycheck (taxes withheld; FICA; unemployment contributions; state employee retirement contributions) are taken out. No deduction that’s not mandated by law, including health insurance, 401(k) contributions, or union dues, is considered. Therefore, most of a person’s income will be considered “disposable income. As a rough rule of thumb, it’s safe to assume that for anyone making much over minimum wage, that 25% of at least 90% of their income could be garnished.
That’s not 25% of income for each garnishment, by the way. It’s a total of 25% of disposable income that may be subject to garnishment, no matter how many creditors there are.
However, adding to the complexity—and pain—is that the 25% rule is for most debts. There are certain debts, like tax obligations and child support, where much more of the debtor’s income can be garnished. For example, depending on the exact circumstances, 50 % - 60% of a debtor’s income could be garnished for child support.
There are two different statutes of limitation relevant to garnishment. The first is the statute of limitations for the underlying debt that garnishment is based on. That will vary with the type of debt or cause of action, though the most common consumer debts will be three years (most revolving charge accounts or cards) or six years (most contracts). If it’s too late to sue, it’s too late to garnish.
What about if the creditor previously sued the debtor, won, and received a judgment in the creditor’s favor? In that case, the creditor has a LONG time in which to act: 20 years, to be precise. Anytime during the 20 years following its judgment, the creditor may look to garnish the debtor’s wages. This means that a patient creditor can wait until a then-down-on-his-or-her-luck debtor starts doing better and has an income worth garnishing.
Remember, garnishment comes after the creditor has already won in court. That means that the debtor has already had his opportunity to defend him- or herself. Therefore, the debtor’s own involvement in garnishment is minimal. The usual process involves the creditor, armed with the judgment in its favor, filing an affidavit with the clerk of the court stating that money is due to it; that garnishment is believed necessary in order for the creditor to be paid; and that the debtor’s employer (the “garnishee”) is believed to have money available and owed to the debtor (debtor’s salary or wages), which can be used to satisfy the debt.
Once the affidavit is filed, the court issues what’s known as a “process of garnishment” ordering the garnishee to show up at court within 30 days. When the garnishee does, the court and debtor will make sure that the garnishee does or will have money owed to the debtor; and if the garnishee does, he’ll be ordered to pay some portion of it—whatever amount has been garnished—to satisfy the debt to the creditor.
If someone is faced or threatened with garnishment, they should seek legal help immediately. There are ways in which to attack a garnishment, such as by attacking the validity of the underlying judgment on which the garnishment is based (though if the case was fully litigated before, there may not be any way to attack the judgment). Another possibility is to show that calculation of the debtor’s disposable income is incorrect and that the amount of the garnishment has to be reduced. Or if the debtor has other obligations, such as child support, it may be possible to show that the debtor is already “fully garnished” and can’t pay anymore. Finally, if some of your income comes from sources other than wages or salary—such as insurance proceeds, public benefits, or certain pensions—an attorney can help you make sure that any income that ought to be exempt from garnishment is being exempted.
More Information: Stopping Wage Garnishment in Alabama