Garnishment in California is a procedure creditors can use to collect from debtors who do not voluntarily pay. For example, 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. Other money of debtor’s in the possession of third parties, such as money in a bank account or pension benefits, could also be garnished (unless it’s specifically made exempt; see below), but wage garnishment is one of the most common kinds of garnishment.
Technically, garnishment is a mechanism for enforcing a judgment, or court decision awarding money. Therefore, a creditor has to first sue the debtor and win in order to establish its right to the money. (Exception: tax authorities, like the IRS, do not need to go to court first.)
California Garnishment Exemptions and Non-Exemptions
Social Security is always exempt from most garnishment, though under federal law, it can be garnished for child support, alimony, federal taxes, and a few other debts owed the federal government.
States have the right to make additional sources of income exempt in whole or in part. Most states carve out at least some exemptions, such as for police or firefighter pensions. California, which is generally one of the most protective states of the rights of individuals, as well as one of the most compassionate to those experiencing hard times, has gone further than the majority of states in protecting different non-wage and non-salary sources of income from garnishment.
(The below is summary of California’s garnishment exemptions. Overall, the state has one of the more complex schemes of exemptions, and any California debtor who may face garnishment or other collections efforts is well advised to seek legal assistance to make sure he or she is taking advantage of all the protections available to him or her.)
- Pensions: all public and private retirement benefits are protected, including distributions from IRAs, state and county worker benefits, and firefighter or police office benefits.
- Public benefits or assistance: California protects a broader array than most states, including workers’ compensation; unemployment benefits; aid to families with dependent children; aid to the blind, disabled, and aged; student financial aid; relocation benefits (when someone is forced to move, owing to government action); and even union benefits owing due to a labor dispute.
- Insurance benefits: disability and health benefits; life insurance proceeds if the policy prohibits proceeds them from being used to pay creditors; matured life insurance benefits, up to the amount needed for support; homeowner’s insurance proceeds, up to the real estate exemption amount (varies with type of property, beneficiary age, and family status)
Therefore, in California, it is difficult to garnish many sources of income other than traditional wage or salary income.
California Maximum Threshold
Like many states, California follows federal law in terms of the maximum amount garnished. Under federal law, the lesser of the following may be garnished:
- The amount by which a debtor’s weekly income exceeds 30 times the minimum wage. This ensures the debtor something to live on, since he or she will be able to keep the equivalent each week of working at least 30 hours at minimum wage.
- 25% of disposable income, with “disposable income” defined as income left after legally required deductions from a person’s paycheck, such as FICA. Only legally mandated deductions are considered in calculating disposable income—other obligations or deductions, even ones enforced by employer policy (e.g. deductions for health insurance), are not counted. As a result, most of a person’s income will be considered “disposable income.”
However, note that the “25% rule” above is for most debts. There are certain key debts, like taxes or child support, for which larger amounts can be garnished.
California Statute of Limitations
Remember, first there must be a valid judgment, which means that the creditor must have sued within the time period for initiating a lawsuit, called a “statute of limitation.” While there are many different statutes of limitation, depending on the cause of action, for most common consumer debts, such as those resulting from—
- revolving charge accounts or cards
- written contracts
—the limitations period is four years.
Once the creditor has a judgment in hand, the creditor has up to 10 years to act. Anytime during the 10 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 before garnishing income.
Writ of Garnishment in California
Garnishment begins when the creditor, armed with the judgment in its favor, applies in writing to court for garnishment. In its application, the creditor states that it is owed money, pursuant to a judgment; that garnishment is believed necessary to secure payment; and that the debtor’s employer (the “garnishee”) has money available and owed to the debtor (the debtor’s salary or wages).
Since the debtor has already had its chance to fight the debt, debtor is only peripherally involved in garnishment. The main actors are the creditor and the garnishee. The garnishee has only very limited grounds for challenging a garnishment, limited typically to the facts of the situation—e.g. that it pays the debtor less than creditor believes, or it cannot identify the debtor from the written description. It cannot challenge the basic right of the creditor to garnishment.
Getting Legal Help
Notwithstanding that creditor will already have a judgment in its favor before seeking garnishment, it may be worthwhile for debtor to seek legal help and look at Stopping Wage Garnishment in California, such as by—
- Attacking the underlying judgment on which the garnishment is based. If it was already fully litigated, there is usually little that can be done at this stage to challenge it on substantive, or merit-based, grounds. However, if there was something improper in how it was granted (e.g. debtor never received proper notice or a chance to contest it), it may be possible to challenge it on procedural grounds. Since California has shorter statutes of limitations than many other states, one possibility might be to attack the underlying debt as too old—or to attack the garnishment itself as too late, though the 10 year statute on judgments gives creditors plenty of opportunity to seek garnishment.
- Showing that calculation of the debtor’s disposable income is incorrect (e.g. most or all of debtor’s income is exempt) and therefore the amount of the garnishment has to be reduced. Given the sheer number of different exemptions that California provides, this is particularly worth looking into in the Golden State.
- Showing that due to other obligations resulting in garnishment (e.g. child support), debtor is already paying at or near the maximum it can be required to pay.