Rhode Island Wage Garnishment Laws

To understand wage garnishment, you need to understand several related concepts:

• A debt is any legally enforceable obligation to pay money. It can come from what is commonly thought of as a debt, such as from a promissory note or a credit card. It can also result from taxes, alimony or child support obligations, breach of a contract, or being sued in tort (for example: for causing a car accident).
• A judgment is a court determination. The most common kind are monetary or money judgments, which are court determinations legally recognizing a debt and requiring one person to pay another.
• Garnishment is when a garnishee is ordered to turn over money belonging to a debtor which is in its possession to satisfy a creditor's money judgment.
• A garnishee is any third party which has money owed or belonging to a debtor; for example, the debtor's employer, which owes the debtor wages or salary for working, could be a garnishee, as could a pension fund or bank holding a debtor's money.

So wage garnishment is when a creditor gets a court order requiring a debtor's employer, as garnishee, to turn over to it a portion of the debtor's wages to satisfy a money judgment. While there are a few states that do not allow wage garnishment, the vast majority, including Rhode Island, do. Fortunately for Rhode Island debtors, their state has some generous exemptions or protections from garnishment.

Rhode Island Garnishment Exemptions and Non-Exemptions

States can establish exemptions to garnishment, identifying sources of income which cannot be garnished. (Sometimes the protection is absolute, so no garnishment at all; other times, the protection is up to a defined dollar amount.) Rhode Island is more protective or solicitous of people who are in financial distress than many states, establishing a wide array of exemptions.

• Social security: this is actually a federal exemption, but it applies in Rhode Island. Social Security can only be garnished for child support, alimony, certain federal debts, such as for income tax.
• State and municipal worker pensions (including firefighters and police officers): public sector workers enjoy broad protection for their retirement benefits.
• Private sector retirement benefits: going further than many states, Rhode Island protects IRAs and many private sector retirement benefits.
• Public benefits or assistance: many types of income derived from public assistance or benefits are protected from garnishment, including workers' compensation; unemployment benefits; aid to families with dependent children; aid to the blind, aged, and disabled; temporary disability; general assistance; certain veteran's benefits.
• Insurance and annuities: there are many kinds of insurance, and not all are exempt; however, enough kinds are that it is worth checking, if you are threatened with garnishment, to see whether your insurance proceeds or benefits may be protected. In particular, accident and sickness benefits are exempt; life insurance, if the policy prohibits diverting the proceeds to creditors; and fraternal society benefits.
• Miscellaneous exempt wages: income earned by certain defined persons is exempt from garnishment, such as:

• o Wages due a seaman
• o Wages to the needy paid by a charitable organization
• o Wages of someone who had been on welfare, for up to year after the person left welfare
• o Wages earned by the debtor's spouse or a minor child (can't be garnished as part of the debtor's income)
• o Certain military wages

Note that not all the above exemptions offer complete protection. Some of them, such as the exemption for IRAs, still allow garnishment for child support.

Rhode Island Maximum Threshold

Even if income is not exempt, not all of it can be garnished; the debtor is generally left an amount which (in theory) should provide him or her enough to live on. Rhode Island follows federal law in setting out the maximum amount of non-exempt income subject to garnishment. The most that can be garnished is the lesser of:

• 25% of the debtor's disposable income

"Disposable income" for this purpose takes in more of a person's income than is usually contemplated by the term "disposable income." In common usage, disposable income is what's left for savings, investment, or recreation after all required expenses, such as food, shelter, heat, transportation, etc. For determining income subject to garnishment, however, disposable income is all income apart from that taken out for legally required payroll deductions, such as FICA. That means that most income is disposable income.

• The amount by which debtor's weekly income exceeds 30 times minimum wage

This ensures the debtor a minimum amount each week equivalent to working 30 hours at minimum wage.

Rhode Island Statute of Limitations

Rhode Island has longer statutes of limitation, or time periods to either sue or to enforce a judgment, than most states. This obviously works in the creditor's favor by giving them longer to decide what to do (including deciding whether it is economically worth it to go to court) and act. They key Rhode Island statutes of limitation are:

• 10 years: most civil actions, including most cases based on breach of contract, promissory notes, or credit cards
• 20 years: time to enforce an action (including by garnishment); also time to sue under an old-fashioned type of contract (rarely used) called a "contract under seal"

Furthermore, remember that since garnishment involves first suing and winning on some debt or cause of action, then enforcing the judgment by garnishment, the total or cumulative time period to sue can be enormous. For example, a credit card issuer can wait 10 years to sue on a default; then after winning, can wait another 20 years before looking to collect. The debtor needs to worry about the debt for a total of 30 years, or a generation-and-a-half.

Writ of Garnishment in Rhode Island

Garnishment involves two-steps: first the creditor sues and obtains a judgment; then the creditor seeks garnishment. Before the creditor can try to garnish the debtor's wages, the debtor has (in theory) already had his or her day in court. As a result, the debtor's involvement in garnishment is minimal, and the main actors involved are the creditor and the garnishee.

The creditor applies in writing to the court for garnishment based on the judgment. The key elements of creditor's application are:

• Creditor has a money judgment
• Debtor has not paid
• Garnishment is believed to be necessary to satisfy the judgment
• Some garnishee(s), such as debtor's employer, is believed to have money available which is owed to the debtor (such as debtor's salary or wages) and which can be used to satisfy creditor's judgment

Court documents are then served on the garnishee. The garnishee will be asked to verify the creditor's information relating to the garnishment; the garnishee can challenge incorrect information, such as whether it owes the debtor wages or other money, and how much it owes. However, the garnishee cannot oppose creditor's basic right to garnishment as remedy, and if the garnishee does have some of debtor's money, it will be ordered (unless debtor can successfully challenge the garnishment; see below) to turn over a portion of it for the creditor's benefit. More on Stopping Wage Garnishment in Rhode Island.

Getting Legal Help

It is often difficult to challenge garnishment. After all, by the time a creditor is seeking garnishment, the creditor has already won at least once in court, establishing a legal right to the money. However, it may be possible to challenge the underlying judgment—which forms the legal basis for garnishment—on procedural grounds. For example, it may be possible for the debtor to establish that the debt was too old (the statute of limitations had passed), or the debtor had never received proper notice of the lawsuit, depriving it of a chance to defend itself. (This often happens, for example, when the creditor won "by default"—but the reason for the default was that the debtor was never actually served or contacted.)

The garnishment itself may be subject to challenge on statute of limitation grounds (though Rhode Island's lengthy limitation period for enforcing a judgment makes this unlikely), on procedural grounds, or due to error—for example, if the creditor is trying to garnish the salary of the wrong person, confusing an innocent party with a debtor.

Failing the above, the debtor's best strategy may be to prove that much of its income is exempt from garnishment, which will reduce the potential amount garnished. Rhode Island's generous exemptions make this a good strategy for a debtor with non-wage, non-salary income to try.

Alternatively, a debtor might be able to show it is already subject to garnishment for other debts, and is therefore being garnished at or close to the maximum possible amount, leaving little or nothing for the new garnishment. (Remember: the 25% maximum threshold is total for all garnishment, not per garnishment.) This will be more difficult if the garnishment being attempted is for taxes or child support, which allow higher total levels of garnishment.

These challenges turn primarily on procedural rules, or the rules for classifying income. Therefore, an attorney's assistance for dealing with these legal procedures is vital.

For more information:

Rhode Island Statutes[http://www.rilin.state.ri.us/statutes/]

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]