Judgment creditors, or people who have legal determinations that they are owed money, can use garnishment to collect from debtors who do not voluntarily pay. Garnishment is the process of getting a court order requiring a third party (called a "garnishee") which has possession or control of some of debtor's money to turn that money over to the creditor for the debt. Wage garnishment is garnishment when the garnishee is the debtor's employer and the money owed to the debtor is wages or salary.
Not all income can be garnished. There are a number of different types or sources of income which have been made exempt, or protected, from garnishment. (Sometime the protection is total—no garnishment; other times, it's only up to certain amount.) For example, everywhere in the country, Social Security is largely (though not entirely) exempt from garnishment. Federal law provides that it can be garnished for child support, alimony, and a few federal debts (like taxes), but for no other reason.
In addition, in Louisiana, several other types of non-wage, non-salary income are protected, or exempt, from garnishment:
Above and beyond specific exemptions, there is a general exclusion of the majority of debtor's income from garnishment, growing out of a recognition that debtors need enough to live on. In most states, only around one-quarter of a debtor's not-otherwise-exempt income can be garnished.
Take Louisiana. While Louisiana has its own law setting out the maximum amount that can be garnished, this law mirrors federal law. Therefore, for all practical purposes, Louisiana, like many other states, follows federal law on the subject. (Ironic that a state whose law was founded in the Code Napoleon would be so conventional and fall right in line with other states.)
Under federal or Louisisan law, the lesser of the following may be garnished:
When talking with your spouse or a financial planner about your budget, "disposable income" means income left over after all necessary expenses: food, shelter, utilities, health care or insurance, transportation, etc. it's more or less synonymous with income available for savings or investment, or possible for recreation.
However, when talking about garnishment, disposable income is ALL income left after taking out only legally required deductions from someone's paycheck. There are not a lot of these, since even employer- or union-mandated deductions don't count—only those required by law. The main one is FICA, and even after you add any additional ones, you are likely looking at less than 10% of income being considered non-disposable. As a rough rule of thumb, for many people, 90% of their income will be available for garnishment.
Unless the creditor is a tax authority, before the creditor can garnish income, it needs a judgment in its favor. That means the creditor must have brought a legal action on the debt during the appropriate statute of limitations, or time to sue. For some of the most common debts, the limitation periods are:
The statute for credit cards is in line with other states. The statute for written contracts is somewhat longer than most.
Assuming the creditor previously sued the debtor and received a favorable judgment, Louisiana gives the creditor another 10 years—a full decade—to seek garnishment or otherwise enforce the action. That gives the creditor the luxury of waiting until a down-on-his-or-her-luck debtor is earning more money before looking to garnish the debtor's income.
To get an order (often called a writ) of garnishment, the creditor asks the court for one to enforce its judgment. The creditor lays out the facts supporting garnishment:
Remember: if the judgment was properly granted previously, the debtor has already had its day in court. Therefore, the debtor's involvement in garnishment is comparatively small—the main action occurs between the creditor, the court, and the garnishee.
The court serves papers on the garnishee requiring it to verify the money it has for the debtor. Assuming there are no errors in the paperwork—
—the court will typically issue an order requiring the garnishee to turn some of that money over for the creditor's benefit.
The garnishee cannot challenge the basic right of the creditor to have debtor's wages garnished. It also has little incentive to do so: the money being garnished is not the garnishee's own money, after all; and if the garnishee refuses to turn the money over, it may incur its own legal liability. More on Stopping Wage Garnishment in Louisiana.
With legal assistance, it may be possible to fight garnishment. Usually, if the underlying judgment was already fully and fairly litigated, it's too late to challenge the debt—the previous litigation was the debtor's chance to do that. However, if something was wrong procedurally with either the judgment or the garnishment (e.g. improper or no notice; actions brought after the statute of limitation), it may be possible to challenge them on those grounds.
It might also be possible to show that the debtor's disposable is lower than the court or the creditor believes, and that therefore the amount that could be garnished is lower, too. One of the key ways to do this is to show that some (or all) of debtor's income comes from exempt sources. Particularly for retirees, given the protection Louisiana affords to many pensions and other retirement benefits, this can be an important way to protect income.