1. UNDERSTANDING GARNISHMENTS
Government Finance Officers
Association of Louisiana
October 8, 2014
Presented by: Rick McGimsey &
Lindsey Hunter

2. What is a garnishment?
A garnishment is a judicial proceeding in which a creditor asks the court to order a third party who is indebted to the debtor to turn over to the creditor any of the debtor's property held by that third party.
La. C.C.P. arts ; Wage Garnishments: R.S. 13:3921 (continuing in nature)
Several types of garnishments. Governed by state and federal laws.
Garnishment is one of many collection tools available to a creditor. Usually follows a JDR.
In some instances, garnishment of a bank account will be more effective for the creditor. Creditor will need to know best time to garnish bank account b/c it’s not continuing in nature. Benefit to garnishing bank account is (1) possibility to be paid faster; and (2) possibility to get access to funds which would otherwise be exempt but which lose the exemption once deposited into a bank account
A garnishment proceeding is a separate proceeding from the original suit and is between different parties. It occurs AFTER a judgment and writ of fifa have been rendered against the debtor.
Before executing a money judgment, judgment must be final and not subject to suspensive appeal. An order awarding support of a child or another person is not subject to a suspensive appeal and is thus executable immediately.
Garnishee is a blameless party—he simply has money in his possession that is owed to the debtor.

3. Waiver of Immunity
The State of Louisiana expressly waives any immunity from suit insofar as the garnishment of nonexempt portion of wages, salaries, commissions, or other compensation of public officials, whether elected or appointed, public employees, or contractors is concerned, of itself, its agencies, boards, commissions, political subdivisions, public corporations, and municipal corporations. La. R.S. 13:3881(C).
State employees used to be exempt from garnishment because of the state’s sovereign immunity.

4. How Does a Garnishment Commence?
After getting a money judgment against a defendant, the plaintiff, i.e., now the judgment or seizing creditor, obtains a writ of fieri facias (“fifa”) from the court.
The judgment creditor then petitions the court for garnishment of the defendant’s wages. Written notice must be sent to judgment debtor by creditor.
The judgment creditor asks that the defendant’s employer be cited as garnishee and answer garnishment interrogatories under oath.
The judgment creditor shall send to the judgment debtor written notice of the filing of the garnishment petition by mail or electronic means. La. C.C.P. art
Judgment must be final and not subject to suspensive appeal before garnishment suit is filed. However, an order awarding child support or support to another person is enforceable immediately. La. C.C. art
If underlying judgment upon which garnishment is based was issued by another court, judgment must be made executory in court issuing the garnishment proceeding. See La. Atty. Gen. Op. No
Failure of the creditor to send written notice to the debtor of the garnishment proceeding being filed has no effect on the proceeding.

5. Proper Service for State Employees: La. C.C.P. art. 2412
Service of garnishment petitions against wages, salaries, or commissions of employees employed within the executive branch of state government shall be made in the following manner:
For employees paid through the statewide uniform payroll of the division of administration, service shall be made on said office.
For all other employees not covered by (1), service shall be made only on the secretary of the department employing the debtor or on his designee.

6. Effect of Service
Employer should begin withholding from date of service.
Employer has 15 days from date of service to prepare and file sworn answers to the interrogatories.
Failure to answer under oath treated as failure to answer
Examples of interrogatories
Court must grant leave to amend answer to interrogatories
If garnishee is an individual (not likely b/c it’s usually a business), service must be personal. C.C.P.art. 2412(C). • When the garnishee is a state or nationally chartered bank with multiple branches, determining to whom (and where) to direct service of process can be vexing, in part because banks often have not appointed registered agents for service, and so the usual information is not available from the Secretary of State. As a practical matter, however, serving an officer at a branch within the parish of suit usually suffices. “[For purposes of state-court venue under [the National Bank Act, 12 U.S.C.A. 94] a national bank is ‘located’ in any county in which it has a branch bank.” Banks may waive venue restrictions expressly, such as by appointing an agent for service of process in the forum state, or impliedly, by regularly conducting business in the forum.
If the garnishee has concealed himself or absented himself with the purpose of avoiding personal service, the court may order that service be made in any other manner provided by law. C.C.P. art. 2412(C).
Examples of interrogatories: Is D employed by you? What’s his salary, when is it paid? Are there prior garnishments? If so, date of service? Does D owe you any money? At time of service, did you have in your possession any $/property belonging or owing to D?

7. 3 Options After Petition & Interrogatories are Served
OPTION ONE: Garnishee files sworn answer & court issues garnishment judgment. Hearing is not necessary. Judgment is served on garnishee.
180 days to obtain judgment from filing of answer
Judgment for employees paid on commission basis: La. R.S. 13:3926
Judgment should allow employer to deduct $3/pay period from non-exempt portion of wages (i.e., 25% being withheld) to cover costs.
Judgment might allow $15 to be withdrawn from court for answering if attorney files answer
Judgment for Commission Based Employees: La. R.S. 13:3926: If employer sets forth that the employee works on a commission basis, the employer shall make a full disclosure of the terms of employment, the amount of the commission and the method of payment of such commission and the dates on which settlements are made with the employee. The court thereupon shall render a judgment ordering a full accounting to be made at each date when such settlements are made and upon the filing of such accounting, the court shall fix the exempt portion and order the non-exempt portion paid in satisfaction of whatever judgment may be rendered.
Garnishee’s duty to withhold from debtor’s paycheck ceases automatically when debtor is no longer on payroll.
If debtor returns to garnishee’s employ within 180 days, garnishment automatically resumes.

8. Option 2: No Answer Filed; Judgment Pro Confesso
If the garnishee fails to answer timely, the seizing creditor may move for a judgment pro confesso, i.e., a judgment against the garnishee for the amount of the judgment.
Contradictory hearing must be held on motion
Judgment must be rendered after hearing unless garnishee proves he has no property of debtor
Costs & attorney’s fees associated with motion awarded to creditor regardless of outcome
After the hearing on the rule to show cause, judgment must be rendered against the garnishee unless he proves that he either had no property of, or was not indebted to, the judgment debtor. If the garnishee does not satisfy this burden, he may still limit his liability by proving the amount of property or indebtedness owed to the debtor, and the judgment against him shall be limited to the delivery of the property or payment of the indebtedness.
Where the garnishee establishes that he did not have any funds in his possession or under his control belonging to the debtor at the time of service of garnishment, the trial court must deny judgment pro confesso but must award the creditor only the costs and attorney's fees associated with the motion for judgment pro confesso.

9. Option 3: Rule to Traverse-La. C.C.P. art. 2414
Creditor may file contradictory rule to traverse garnishee’s answers
15 days from date of service of notice of filing garnishee’s answers
Creditor must disprove garnishee’s answers
If answers are filed and creditor fails to traverse them, any property other than that admitted in answer is released from seizure.

10. Remit $$ to Sheriff
After the garnishee knows the proper amount to remit, it should send that money to sheriff each pay period.
6% commission for constable is permitted by 33:1428(A)(7)(a) to be paid by plaintiff in writ. Tucker v. Fowler, (La. 2/28/96), 668 So. 2d 718.
Sheriff gets 6% even if judgment orders funds paid directly to seizing creditor. Stevens v. Lockett, 528 So. 2d 689 (La. App. 2 Cir. 5/4/1988).
Wages earned out of state and payable out of state are exempt from garnishment in all cases where the cause of action arose out of state. La. R.S. 13:3951.

11. How Much Money Does Garnishee Withhold?
In every garnishment, “a judgment shall be rendered by the court of competent jurisdiction in which the garnishment proceedings may be pending fixing the portion of such wage, salary, commission, or other compensation as may be exempt, as provided by law, and providing for the payment to the seizing creditor of whatever sum for which judgment may be obtained, out of the portion of such compensation which is not exempt.” La. R.S. 13:3921(A).
Only 25% of “disposable earnings” may be withheld from each paycheck.
Exception for child or spousal support orders
Exception for IRS lien
30 x federal minimum wage exception
Employees working and paid on a commission basis, La. R.S. 13:3926: If in response to such interrogatories the employer sets forth that the employee works on a commission basis, the employer shall make a full disclosure of the terms of employment, the amount of the commission and the method of payment of such commission and the dates on which settlements are made with the employee. The court thereupon shall render a judgment ordering a full accounting to be made at each date when such settlements are made and upon the filing of such accounting, the court shall fix the exempt portion and order the non-exempt portion paid in satisfaction of whatever judgment may be rendered.

12. Disposable Earnings
Disposable earnings are the part of the earnings of any individual remaining after the deduction of any amounts required by law to be withheld and those amounts that are reasonable and are being deducted in the usual course of business at the time the garnishment is served upon the employer.
25% of disposable earnings may be garnished
Employee must always be left with weekly pay of 30x federal minimum wage (30 X $7.25 = $217.50)
Deductions already in place when served could be: retirement, medical or life insurance, amounts owed to employer
Deductions that cannot be counted in disposable earnings calculation: union dues, uniforms, credit union deductions, parking
Spousal support: 40% and not subject to 30x federal minimum wage
Child support: 50% (most orders set forth a dollar amount rather than a percentage)
If the 25% withholding will leave employee with less than $ per week, then must withhold less than 25%.
Money paid out on garnishment counts toward minimum wage requirements under Fair Labor Standards Act.

13. Example 1: Weekly Wages Creditor Garnishment
DISPOS. EARN. NET PAY
GROSS PAY $900
Soc. Sec/Medicare
Federal Income Tax
State Income Tax
Medical Insurance
Life Insurance
Retirement
Credit Union
$ $ 570
25% Garnishment _________
Employee keeps $465

14. Example 2: Weekly Wages Creditor Garnishment
DISPOS. EARN NET PAY
Gross Pay $350
Soc. Sec./Medicare
Federal Income Tax
State Income Tax
Medical Insurance
Life Insurance
Retirement
Credit Union $ $180
25% Garnishment
Employee keeps?? $172.50** (continued)

15. Example Two, cont’d. $230 $180 25% Garnishment - 57.5
DISPOS. EARN NET PAY
$ $180
25% Garnishment
Employee keeps?? $172.50**
**But federal law requires that employee always keep $ per week (30 x federal minimum wage)
DISPOS. EARN NET PAY
$ $180
Employee keeps
Garnishment payment $ /wk
MODIFICATION: The court, in its discretion, may reopen garnishment cases upon the motion of any concerned party for allow evidence showing changes in the employee’s employment status or rate of pay.

16. Are Disability Payments Earnings?
Disability payments ARE earnings if made pursuant to a contract of health, accident or life insurance. In this case, they are EXEMPT.
Disability payments simply made by employer and not pursuant to insurance policy are NOT EXEMPT.

17. Are Workers’ Compensation Payments Earnings?
Workers’ Compensation payments are exempt from all claims of creditors and from levy or execution or attachment or garnishment, except under a judgment for alimony in favor of a wife, or an ascendant or descendant. La. R.S. 23:1205.
LA courts have interpreted this provision as applying to benefits due, not benefits received.

18. Are Retirement Benefits Earnings?
La. R.S. 11:405: An annuity, retirement allowance or benefit, or refund of contributions, or any optional benefit paid to any person is exempt from garnishment.
Exception: retirement benefits may be garnished to pay support judgments. La. R.S. 11:292.

19. Satisfaction of Garnishment
Garnishment continues until entire debt, interest, attorney’s fees, and sheriff’s or constable’s commissions are paid in full.
Garnishee should make sure to obtain satisfaction of judgment.
A wage garnishment continues until the debt is paid or until the termination of employment. When employment terminates, the garnishee is not required to notify the seizing creditor, but may establish the termination as a defense to subsequent failure to deliver funds to constable.

20. Garnishment FAQ: Multiple Garnishments
Generally, garnishments are paid in the order they are served on garnishee, not by date of garnishment judgment.
La. R.S. 13:1925(C): Debt to garnishee cannot take preference over enforcement of child support obligation.
Debt to employer can sometimes be treated as a prior garnishment
An employee’s debt to the employer that is not being liquidated at the time the garnishment is served can nevertheless be considered a prior garnishment.
Employer must include the debt in answer to interrogatories AND disclose debt in writing by certified mail to creditor showing when the debt was incurred, the amount of the debt and any credits applied to the debt, and the manner in which it is being liquidated. If seizing creditor does not file objection within 15 days, employer is presumed to have prior garnishment.

21. Multiple Garnishments, cont’d.
Child support orders, no matter when entered or served, take priority over every garnishment and levy except a federal tax levy served before entry of a child support order. The key date is that of the support order, not the income withholding order.
Two or more support orders (either child or spousal) will be prorated up to the legal limits.
La. R.S. 13:3928: In any criminal or civil matter, a judgment, decree, order, or sentence of court, or a sale, transfer, or assignment of earnings by which a person is obligated to pay for the current or past due support, or both, of a child or children, or of a parent of a child or children if the Department of Children and Family Services is providing support enforcement services to the parent, shall prime in enforcement any prior or subsequent judgment, decree, order, or sentence of court, or sale, transfer, or assignment of earnings, and shall be satisfied out of the nonexempt portion of disposable earnings.

22. Garnishment FAQ: Employee Rights
Money paid out on garnishments counts towards the minimum wage requirements under FLSA.
Employer may not terminate an employee because of a garnishment. Termination is permitted only if employee actually withholds under three or more garnishments, support orders, or levies within a two-year period.
Employer cannot deny employment to a prospective employer because of garnishments.
A person unlawfully discharged due to garnishment has a right to reinstatement and back pay but not damages. A person denied employment is entitled to reasonable damages. R.S. 23:731.

23. Garnishment FAQ: Employee Bankruptcy
The mere filing of bankruptcy automatically stays any garnishment proceeding against the bankrupt debtor or “property of the estate.”
The bankruptcy court will enter an order instructing the employer to stop withholdings.
Withholdings for child or spousal support may continue against property that is not property of the estate.
There is typically some delay between an employer’s withholding of an employee’s wages and sending the withholding. If the employee files bankruptcy after the withholding but before the employer has remitted it, do not release the funds.

24. Bankruptcy, cont’d.
Chapter 7: Earnings after the filing of the employee’s bankruptcy petition are not property of the bankruptcy estate. Thus, withholding for child or spousal support can continue.
Chapter 13: Earnings after the filing of employee’s bankruptcy petition are property of the bankruptcy estate. Thus, the withholding of child or spousal support cannot continue unless and until bankruptcy court issues an order lifting the stay.
La. Atty. Gen. Op. No : Garnishment funds held by a court may be remitted to Unclaimed Property Division of the State after one year.

25. Garnishment FAQ: Failure of Garnishee to Withhold or Remit
If the judgment creditor suspects he has not been paid in accordance with the garnishment judgment, it will file a rule for an accounting. When creditor does so and establishes he has not been paid in accordance with judgment, burden of proof shifts to the employer to explain its failure. Johnson v. Fulwood, 398 So. 2d 1151 (La. App. 4th Cir. 1981).
Court may order garnishee to pay the amounts that should have been withheld from date of garnishment order, and to continue garnishment payments until debt is satisfied. Bank One v. Anima Home Health, 950 So.2d 886.

26. FAQ: Wrongful Garnishment
A judgment creditor who wrongfully garnishes property is answerable in damages to the owner of the property wrongfully seized.
Compensable items of damages in such cases include damages for loss of use of the funds seized, inconvenience, mental distress, embarrassment, and injury to reputation. Homemakers Loan & Consumer Discount Co. v. Arthur, 333 So. 2d 686 (La. Ct. App. 4th Cir. 1976).

27. Garnishment FAQ: Garnishment for Community Debts
To the extent that a debtor's community property can be seized in satisfaction of a creditor's judgment, the debtor's spouse's earnings and other property also may be garnished, under appropriate circumstances, based upon the presumption, which is rebuttable, that earnings and property of both spouse are community.
The nonparty spouse is arguably entitled to specific notice before execution of the judgment against community property. See, e.g., Jones v. Flowers, 547 U.S. 220, 126 S. Ct. 1708, 1721, 164 L. Ed. 2d 415 (2006), Rayne State Bank and Trust Co. v. Fruge, 546 So. 2d 637 (La. Ct. App. 3d Cir. 1989), writ denied, 551 So. 2d 1319 (La. 1989).

28. Garnishment FAQ: Wages of Independent Contractor
Money owed to an independent contractor may not be “wages” within the meaning of La. R.S. 13: Consequently, the garnishing of money owed to an independent contractor is not continuing and is effective only as to money owed at the moment of service on the garnishee. Tower Credit, Inc. v. Carpenter, 825 So. 2d 1125 (La. 2002).
The distinction between employee and independent contractor status is a factual determination to be decided on a case-by-case basis.

29. Helpful Legal References
La. R.S. 13:3881 (exemptions from seizure and disposable earnings)
La. R.S. 13: (garnishment procedures)
La. C.C.P. arts (more garnishment procedures)
La. Children’s Code arts (Uniform Interstate Family Support Act)
La. R.S. 23:1205 (workers comp. exempt)
La. R.S. 23:731 (prohibiting termination of employees for garnishments)
La. R.S. 47:1570 (tax levies)
La. R.S. 46:236.3 (income assignment for support orders)
La. R.S. 22: 646 (disability payments and garnishment)

30. Contact Information
Lindsey Hunter
Civil Division
Post Office Box 94005
Baton Rouge, Louisiana 70804
Phone: (225)