Employers occasionally receive writs of garnishment from their employees’ creditors, who seek to garnish wages earned by the employees. Knowing the basic elements of garnishment procedure can aid employers in avoiding some of the hassles and even significant liability that can result from garnishment proceedings.
Garnishment is a procedure whereby a creditor may recover property in the hands of a third party that belongs to a debtor. Under Nebraska law, a garnishment may be undertaken before or after judgment has been entered, but a garnishment for wages may only occur after the entry of a judgment. The parties involved in a garnishment of wages are typically a judgment debtor, a judgment creditor, and a garnishee (i.e., the judgment debtor’s employer).
I. Commencing the Garnishment Proceeding
Under Nebraska law, a garnishment proceeding is commenced when a judgment creditor files with a court a Praecipe and Affidavit for Summons in Garnishment, which must set forth (1) the amount due on the judgment; (2) interest; (3) costs in the office of the clerk of the court where the judgment has been entered; and (4) a statement that the person making the affidavit has reason to believe and does believe that the garnishee has property of and is indebted to the judgment debtor.
Once the Praecipe and Affidavit for Summons in Garnishment is filed, the clerk of the court then issues a summons requiring the garnishee to answer written interrogatories concerning any property of the debtor that the garnishee is holding. The summons must then be served upon the garnishee, together with Interrogatories, an Order of Garnishment, a Notice to Judgment Debtor Form, and a Request for Hearing Form, in the manner provided for service of a summons in a civil action, which may be accomplished by, among other things, certified mail or by personal service by the county sheriff.
The judgment debtor must also be given notice of the garnishment and copies of all of the documents described above via certified mail within three business days after the issuance of the summons by the court. The judgment debtor may request a hearing if he or she believes the Court should not allow a garnishment, either because the funds are exempt or because the amount is not owed on the judgment. This is done by filling out and filing with the court the Request for Hearing Form.
II. Answering the Garnishment
The garnishee is required to give answers to the Interrogatories in writing regarding any of the judgment debtor’s property that the garnishee has in his/her possession or control at the time of the service of the summons, such as wages or salary that an employer might owe the debtor. The deadline for answering the Interrogatories is ten days from the date the Interrogatories were served. Although the Answers to Interrogatories technically need not be verified or made under oath, the garnishee may nevertheless be subject to penalties for willfully falsifying the answers.
If the garnishee has property of the debtor or owes the debtor an obligation and he/she answers within the prescribed time, he/she can pay that amount into the court and be discharged of liability for that amount. If the garnishee does not voluntarily pay into the court the amount owed, the court can order him/her to do so or can allow him or her to retain the property if he/she presents the court with sufficient security to show that the amount will be paid as the court may direct. The court may dispense with the surety requirement if the garnishee presents sufficient facts that insure the amount owing will be paid.
When the property held by the garnishee is wages, the garnishee must pay the employee all disposable earnings that are exempted from garnishment by statute, and any disposable earnings remaining after such payment must be retained by the garnishee until further order of the court. Under Nebraska’s exemption statute, the maximum amount of a judgment debtor’s disposable earnings for one work week that can be subject to garnishment is the lesser of (1) 25% of the debtor’s disposable earnings for the week; (2) the amount by which his/her earnings exceed thirty times the federal minimum wage; or (3) 15% of the disposable earnings for the week if the judgment debtor is the head of a family. These restrictions do not apply to bankruptcy court orders, orders for the support of a person, or state or federal tax debt.
III. Continuing Lien
If the garnishee’s Answers to Interrogatories show that the debtor is an employee of the garnishee, that the garnishee otherwise owed earnings to the judgment debtor when the garnishment order was served, or that earnings would be owed within sixty days thereafter, then the judgment creditor can apply for a continuing lien on nonexempt earnings. If a continuing lien is put in place, then beginning with the pay period during which the Writ of Garnishment was served and while the continuing lien remains in effect, the garnishee must deliver the nonexempt earnings of the debtor to the court from which the garnishment was issued for each pay period or on a monthly basis and shall deliver to the judgment debtor his or her exempt earnings for each pay period.
A continuing lien remains in effect until the occurrence of any of the following events: (1) the underlying judgment is satisfied in full or vacated or expires; (2) the judgment debtor leaves the garnishee’s employ for more than sixty days; (3) the judgment creditor releases the garnishment; (4) the proceedings are stayed by a court of competent jurisdiction, including the U.S. Bankruptcy Court; (5) the judgment debtor has not earned any nonexempt earnings for at least sixty days; (6) the court orders that the garnishment be quashed; or (7) ninety days have expired since service of the Writ, provided that the judgment creditor may extend the lien for a second ninety-day period by filing a Notice of Extension during the fifteen days immediately prior to the expiration of the initial lien.
Only one Order of Continuing Lien against the earnings due the judgment debtor may be in effect at any one time. If an employer receives a writ of garnishment and the employee’s wages are already being garnished under another continuing lien at the time the second one is served, the employer must so indicate in the Answers to Interrogatories and must state the date of termination of the first continuing lien and the title of the case from which the garnishment issued.
IV. Remedies of the Creditor
If the garnishee fails to answer, he/she is presumed to be indebted to the defendant in the full amount of the plaintiff’s claim, but this presumption is rebuttable. Nevertheless, upon notice to the garnishee, judgment may be entered against the garnishee in the full amount of the judgment debtor’s debt to the judgment creditor.
If a garnishee files Answers, but the Answers are not satisfactory or if the garnishee does not deliver the money owed to the judgment debtor to the court after being ordered to do so, the judgment creditor may apply within twenty days for a determination of the liability of the garnishee. If no such application is filed within twenty days, the garnishee is released and discharged. In most cases, if an application is filed, the garnishee will simply amend the Answers to Interrogatories. If it does not, a trial may then be held on the issue of the garnishee’s liability. Such a trial would be conducted in the same manner as a civil trial, and a judgment may be entered against the garnishee and in favor of the creditor.
V. Conflict of Liens
As a general rule, the priority of liens is determined by the order of service. The exception is that if the garnishment is for a support obligation, the support obligation takes priority over any other garnishment. A right of setoff in favor of the garnishee is subject to the garnishment if the right of setoff was not exercised prior to service of the garnishment. Thus, an employer having a claim against an employee will be subordinated to a Writ of Garnishment if the employer has not effected the setoff before receiving the Writ.
If a debtor files a bankruptcy petition, the garnishment is stayed under the Bankruptcy Code and any continuing lien is terminated under Nebraska law.
VII. Practice Pointers
Employers should make sure that their employees know to whom they should send any garnishment orders they receive (or any other civil process) and that time is of the essence in getting the garnishment to the right people.
Employers should never ignore garnishments, even if the debtor listed in the garnishment order is no longer an employee.
Employers should be careful to follow the instructions in the garnishment order and Interrogatories.
Employers should make sure that Answers to the Interrogatories are filed with the court within ten days after service.