Wage garnishment is one of several ways that creditors can enforce a monetary judgment (court order that someone pay them money) against debtors who do not pay. Specifically, wage garnishment is when the creditor can have part of the debtor’s wages or salary sent to the creditor, in order to satisfy the debt.
Creditors (other than a tax authority, like the IRS) need a judgment (court order) to garnish wages, which means that the creditor has to first sue the debtor and win, to establish its right to the money. This in turn means that until a creditor sues and wins, garnishment is unavailable.
Garnishment is most commonly thought of as wage garnishment for consumer debts, such as from credit cards or contracts of sale. However, garnishment is actually available for any debt, including debts resulting from accidents, professional malpractice, the expenses of medical care, or (very commonly) alimony, child support, or taxes. Garnishment is also available against more than just wages or salary: any money belonging or owed to a debtor, which is in the control of a third party, is potentially subject to garnishment, including pension benefits and bank accounts. While this article will focus on wage garnishment, bear in mind that garnishment is broader than that.
Ohio Garnishment Exemptions and Non-Exemptions
Before getting to Ohio exemptions—or types of income sheltered from garnishment—there is a broad federal exemption: Social Security can only be garnished for child support, alimony, and certain federal debts, such as taxes.
Ohio has also established a number of additional exemptions for non-wage, non-salary sources of income, including:
- Pensions and retirement benefits: there are broad exemptions for the pensions of many types of public employees, including but not limited to police and fire fighters. If a debtor works for the state of Ohio, a county, municipality, or school district, and is drawing (or will shortly draw) retirement benefits, the debtor should check to see the pension is one of the exempt ones.
In addition, there is protection for private retirement benefits, including money in IRAs or Keoghs, up to a certain dollar value. Someone receiving private retirement benefits or distributions should check to see how much of their benefits may be exempt.
- Public benefits or assistance: many types are exempt, including workers’ compensation, unemployment benefits, cash assistance through “Ohio Works,” crime victim’s compensation, disability assistance, and even certain tuition credits. Anyone receiving public assistance who may be the target of garnishment should check on whether his or her benefits are exempt.
- Insurance benefits and annuities: Ohio exempts many such benefits, including disability benefits; group life insurance proceeds; annuity benefits for dependents; or life insurance proceeds in many situations or contexts (e.g. if the policy bars creditors from taking the proceeds; or life insurance benefits paid to a spouse).
Ohio exempts more types of non-wage, non-salary income than many other states.
Ohio Maximum Threshold
Ohio has chosen to follow federal law on how much of a person’s income is subject to garnishment. Under federal law, the lesser of the following may be garnished:
- 25% of disposable income, with disposable income defined as ALL income remaining after legally required payroll deductions. There are actually very few legally required deductions—FICA is the main one for most people—so most of a person’s income will be considered “disposable” and potentially be available to creditors. (Note: other “mandatory” deductions, such as for the employee’s portion of a company health plan, do not reduce disposable income.)
- The amount by which a debtor’s weekly income exceeds 30 times the minimum wage, which makes sure the debtor has at least an amount equivalent to working 30 hours at minimum wage on which to live.
That’s not 25% of income for each garnishment—it’s 25% total that may be garnished, no matter how many judgments, debts, or creditors there are.
Note, however, that there are certain debts, like child support or taxes, where income can be garnished. For example, under federal law, up 60% of a debtor’s income could be garnished for child support.
Ohio Statute of Limitations
The statute of limitations is the time to bring a lawsuit or to enforce a judgment. Unfortunately for Ohio debtors (though fortunately for their creditors), Ohio has longer-than-average statutes of limitation.
In terms of the underlying debt, for the most common sources of consumer debt—contracts, open accounts, and credit cards—the Ohio limitations periods are:
- Open account, credit card, oral contract: 6 years
- Written contract: 15 years(!)
Once the creditor has a judgment, the creditor has a further 21 years in which to enforce it. That means that a creditor can wait a L-O-N-G time for a financially distressed debtor to get to a position or income level where garnishment is worthwhile. To put it in perspective: if a debtor had a child at the moment the creditor won a lawsuit against the debtor, that child would be able to vote, drive, and would be going off to college and the creditor would still have time left to seek garnishment or otherwise collect on the debt.
Writ of Garnishment in Ohio
Once a creditor has a judgment, the creditor begins the garnishment process by filing a written affidavit with the court which will set out the vital information, including (most critically) that there is someone, called the “garnishee” who has money belonging or owed to the debtor which can be used to satisfy the creditor’s judgment. The garnishee will be served papers and directed to “answer” the garnishment; but if the garnishee cannot dispute some factual basis of the garnishment (e.g. that it doesn’t have money for the debtor, or that the amount is wrong), it will ultimately be directed to divert some of the money for the creditor’s benefit.
The debtor has very little to do with the garnishment process—it is principally between the creditor and the garnishee, since the debtor (in theory) had a chance to dispute the debt earlier, during the legal action which resulted in the creditor getting a judgment in its favor.
Also, while the garnishee—as noted above—can challenge a factually inaccurate garnishment, it can’t challenge the creditor’s fundamental right to garnishment as a remedy. And since creditor is not taking the garnishee’s money anyway, but rather money it owes to the debtor, there is comparatively little incentive for the garnishee to fight in any event.
In short, assuming the judgment is valid and the garnishee has nonexempt money of the debtor, garnishment is almost “automatic”—it’s just a matter of the creditor following the proper procedures.
Getting Legal Help
The key to challenging a garnishment then—assuming that it doesn’t rest on some fundamental error, such as identifying the wrong debtor, or garnishing for a debt which has in fact already been paid—hinges on two main strategies:
1) Show that there was something procedurally wrong or invalid about the judgment or the garnishment, such as the statute of limitations having passed or notice not being served in the proper way.
2) Show that the debtor’s income is mostly or entirely exempt, so there is little or no disposable income to garnish. (Or a related strategy—establish that the debtor is already being garnished to the maximum for other debts.)
Since the grounds for fighting garnishment involve legal procedure and the rules for different income exemptions, legal assistance from a qualified attorney can make the difference between a successful challenge and an unsuccessful one.
For more information:
Ohio Revised Code (yes, the state’s law is abbreviated “ORC”)[ http://codes.ohio.gov/orc]
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]