Garnishment laws in Wisconsin | DebtSettlementLawyers.com

Most people have heard the term “garnishment,” but what is it?

Garnishment is a legal process or mechanism for enforcing (or being paid on) a monetary judgment (or a court determination that one person owes another money). Unlike other mechanisms for enforcing a judgment, such as executing on property, which is a forced sale of some of the debtor’s property for the benefit of the creditor, garnishment involves an order directed at a third party, called a garnishee. The garnishee is someone—anyone—who has in his, her, or its possession money which belongs to the debtor or which is owed to the debtor; for example, a bank, holding the debtor’s money in an account, could be a garnishee. In garnishment, the garnishee is directed to turn that money over to the creditor, for the satisfaction of the judgment. When the garnishee is the debtor’s employer, and the money belonging or owed to the debtor is his or her wages, then the process is called wage garnishment.

Wisconsin Garnishment Exemptions and Non-Exemptions

Fortunately for debtors, not all income may be garnished; there are several kinds of non-wage, non-salary income which are exempt from garnishment. For example, Social Security can only be garnished for child support, alimony, federal taxes, and certain other debts owed the federal government. Other exemptions in Wisconsin include:

Pensions or retirement benefits: Wisconsin provides extensive protection for retirement benefits. Many public employee pensions (including many municipal worker, fire fighter, and police pensions) are exempt from garnishment. In addition—and where Wisconsin goes further than most states—private pensions and retirement plans or accounts are protected, at least up to the level necessary for the recipient’s support. Military pensions are protected as well.
Public assistance or benefits: many forms of public assistance or benefits have at least some protection from garnishment, including workers’ compensation; unemployment benefits; aid to families with dependent children; and crime victim’s compensation. If a Wisconsin debtor is receiving public assistance, he or she should check to see whether it is exempt from garnishment.
Insurance benefits or annuities: many insurance benefits are protected, including: federal disability benefits; fraternal society benefits; and life insurance if the beneficiary is a dependent of the insured (at least up to the level needed for support of the dependent).
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, wrongful death award is exempt, if the award is for the death of a person who was supporting a dependent. In addition, some awards not for the benefit of a dependent are exempt , too, at least up to a certain level, such as awards for bodily injury in personal injury cases.
Alimony and child support, up to the level needed for support.

Wisconsin Maximum Threshold

Wisconsin is more protective of debtors than is federal law or many other states. Under Wisconsin law, the lesser of the following may be garnished:

A maximum of 20% of disposable income—total, not per garnishment (federal law allows up to 25%)
The amount by which a debtor’s weekly income exceeds 30 times the minimum wage (same as federal law)

What is “disposable income” for garnishment purposes? In everyday usage, it’s usually thought of as the income left over after all necessary expenses, including food, shelter, transportation, and health care or health insurance. However, the law defines it differently for garnishment purposes: it is ALL income remaining FICA and any other legally required payroll deductions. Since only deductions mandated under law reduce disposable income, most of a person’s income will be considered “disposable income,” subject to garnishment, up to the maximum threshold above.

However, that maximum threshold is not absolute. There are certain debts—principally taxes and child support—that allow greater-than-normal garnishment.

Wisconsin Statute of Limitations

Both creditors and debtors should always remember that garnishment involves two steps: (1) obtaining a judgment; (2) enforcing it, via garnishment. This means that before garnishing, a creditor first needs to sue. That in turn means it needs to make sure it brings its legal action before the statute of limitations—or time to sue—runs out. The limitations period varies by cause of action; for many common consumer causes of action in Wisconsin, the limitations period is six years:

Open account or credit card: six years
Oral or verbal contracts: six years
Written contracts: six years

However, the time to sue on a promissory note is longer:

Promissory note: ten years

After a Wisconsin creditor has a judgment, the creditor has another 20 years(!) to enforce it by garnishment or otherwise. This lets the creditor wait until a financially distressed debtor is earning enough to make it worthwhile to garnish his or her income.

Writ of Garnishment in Wisconsin

The creditor seeks garnishment by going to the court to ask for it. (Creditors can not garnish on their own; like eviction, it’s a legal process that requires a court order.) The creditor bases its request for garnishment on its judgment and states in writing that the debtor is not paying the judgment, and therefore garnishment is believed necessary to make sure that the judgment is satisfied (paid). The creditor further identifies some garnishee (e.g. the debtor’s employer) that it believes has money owing or belonging to the debtor (e.g. the debtor’s salary) which can be applied to the judgment.

Papers will be served on the garnishee, to bring it into the action. The garnishee will have a chance to challenge the factual assertions made by the creditor, such as whether and how much money it owes to the debtor. Assuming that the garnishee does in fact have money for the debtor, and that the debtor cannot successfully dispute or challenge the garnishment, a writ or order of garnishment will be issued, and the garnishee will be instructed to divert at least part of the debtor’s money to the creditor. More on Stopping Wage Garnishment in Wisconsin.

Getting Legal Help

It is often possible to fight garnishment by showing that something was procedurally wrong with either the original judgment or the garnishment, such as:

Attacking the judgment or the enforcement action as too old (state of limitations)
Asserting that the debtor never received proper notice that he or she owed money or was being sued

It is often impossible to challenge garnishment on “substantive” grounds or the merits, unless there is some clear mistake, such as the debt having previously been paid or the wrong debtor being named. The reason is, in the absence of errors, the debtor already had a chance, during the earlier litigation that resulted in the creditor getting a judgment in its favor, to challenge the claim that it owes money.

It may be possible to show that much—or most—of the debtor’s income comes from exempt sources, and so are not available for garnishment. Or possible to demonstrate that due to other garnishments the debtor is already paying (e.g. child support), he or she debtor is already at the state garnishment limit.

For any of these challenges to the fact or amount of garnishment, a lawyer’s help is almost always vital—these challenges turn on legal procedure, after all.

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