North Dakota Wage Garnishment Laws

When a debtor does not pay a creditor after the creditor has already obtained a court judgment that the debtor should pay, the creditor can use several mechanisms or processes to enforce the judgment and obtain payment. One of those mechanisms is known as garnishment, and that is when the creditor gets an order forcing a third party which has money belonging (or owed) to the debtor to turn that money over for the creditor's benefit. One of the most common kinds of garnishment is wage garnishment, which is when the debtor's employer needs to turn over part of the debtor's wages or salary; however, garnishment is not limited to wages or salary.

When speaking of a "debt" for garnishment purposes, a debt is any legal obligation to pay money, and can come out of consumer debt, credit card usage, a contract, taxes, child support, or alimony—or even from torts, such as an auto accident or professional malpractice.

North Dakota Garnishment Exemptions and Non-Exemptions

Not all income is subject to garnishment—there are several types of non-wage, non-salary income which are protected from being garnished, in whole or in part. Federal law, for example, protects Social Security from garnishment except for child support, alimony, federal taxes, and a few other debts to the federal government. In addition, all states will establish at least some additional categories of income or assets which have exemptions from garnishment. In North Dakota, those main exemptions are:

• Pensions or retirement benefits: many public employee pensions are protected from garnishment, as are many private retirement benefits (such as money in an IRA)—though note that while protected public pensions are entirely protected, private retirement benefits may only be exempt up to a certain amount.
• Veteran's benefits: North Dakota exempts disabled veterans benefits and benefits to veterans of armed conflicts.
• Public assistance or benefits: many forms of public assistance or benefits are protected from garnishment, including workers' compensation; unemployment benefits; aid to families with dependent children; and crime victim's compensation.
• Insurance benefits or annuities: many insurance benefits are also protected, including: disability or illness benefits; fraternal society benefits; and life insurance payable to the deceased's heirs or estate (exempt from the insured's own debts).
• Awards from lawsuits: Certain kinds of income streams (such as from structured settlements) from successful lawsuits are exempt from garnishment, if they are for the support of dependents. For example, an award for lost future income is exempt, if it is used to provide for a dependent; or a wrongful death award is exempt, if the award is for the death of a person who was supporting a dependent.
• Alimony or support, up to the level needed for support.

In North Dakota, if a debtor is receiving some non-wage or non-salary income, there is a good chance it is exempt from garnishment

Maximum Threshold

North Dakota is more protective of low-income debtors than federal law. The state only allows the lesser of the following to be garnished:

• 25% of disposable income (same as federal law,)
• The amount by which a debtor's weekly income exceeds 40 times the minimum wage (under federal law, it's only 30 times)—this ensures the debtor at least the equivalent each week of working at 40 hours at minimum wage.

What is "disposable income" for purposes of garnishment? In other contexts, it's thought of as the income left over after all necessary expenses, including food, transportation, health insurance, and housing. Unfortunately for debtors, the law defines it much more strictly for garnishment purposes. It is ALL income left after legally required payroll deductions, such as FICA. Even other paycheck deductions, such as for the employee's share of health insurance, are not considered—only deductions mandated under law reduce disposable income. Most of a person's income will therefore be considered "disposable income," available to be garnished.

It's important to also bear in mind that certain debts—principally taxes and child support—will allow greater-than-normal garnishment.

Statute of Limitations

There are two different statutes of limitation to consider. The first is for the underlying debt upon which garnishment is based. That will vary by cause of action, though for the most common consumer debts, the limitations period (or time to sue) is:

• Four years, for sale of goods
• Six years, for open accounts (credit cards) and contracts

If the lawsuit was not brought in time, there can be no garnishment.

In North Dakota, once a creditor has a judgment, the creditor has at least 10 years to enforce it, including by garnishment. The creditor can afford to be patient, waiting until a then-unemployed or underemployed debtor begins earning more before garnishing the debtor's wages.

Writ of Garnishment in North Dakota

Because garnishment comes after the creditor has obtained a judgment by winning in court, the debtor has already had an opportunity to defend him- or herself. This means that the debtor's involvement in garnishment is minimal. The main parties to garnishment are the creditor and the party which has money belonging, or owing, to the debtor, known as the garnishee.

The creditor goes to a court to enforce the judgment. It will apply in writing for garnishment as remedy, in its application stating that it has a judgment for money which the debtor has not paid, and therefore that garnishment is necessary. The creditor will also describe one or more garnishees, such as the debtor's employer(s), who are believed to have money belonging to the debtor which can be used to satisfy the judgment.

The court will then serve paperwork on the garnishee requiring the garnishee to verify that it has money owed to the debtor. The garnishee can try to challenge the creditor's assertions, such as by showing that it pays the debtor less than the creditor believes, or that the debtor does not work there. However, the garnishee cannot challenge creditor's basic right to garnishment as a remedy. Assuming that the garnishee does have debtor's money (and that the creditor's judgment is valid), it is very likely that garnishment will ordered. More on Stopping Wage Garnishment in North Dakota.

Getting Legal Help

It is possible to fight garnishment, usually by showing that something was procedurally wrong with the original judgment or the garnishment, or that the debtor's income is exempt (e.g. that it is provided by exempt sources). Typically challenges on a procedural basis involve attacking the judgment or the enforcement action as too old, based on the statute of limitations, or asserting that the debtor was never given proper notice of the debt or that creditor was suing.

It is almost impossible to challenge a garnishment on "substantive grounds"—i.e. that the debtor does not owe the debt—unless there is some obvious mistake: the wrong person named, for example; or the debt was previously paid; or the amount of the debt is incorrect. However, in the absence of errors, the debtor already had their chance, when they were sued previously, to dispute the debt.

It may also be possible to show that owing to other garnishments (e.g. child support) the debtor is already at the garnishment limit.

Since most challenges to garnishment involve some element of legal process or procedure, the help of an attorney in fighting garnishment is invaluable.

For more information:

North Dakota Century Code[http://www.legis.nd.gov/information/statutes/cent-code.html]

FAQ sheet about Federal garnishment rules[http://www.dol.gov/whd/regs/compliance/whdfs30.pdf]

Social security and garnishment[http://www.ssa.gov/deposit/DDFAQ898.htm]