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Collecting Accounts Receivable Part V: Garnishing a Debtor’s Assets
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Collecting Accounts Receivable Part V: Garnishing a Debtor’s Assets

July 26, 2013 Banking & Financial Services Industry Legal Blog

Reading Time: 5 minutes


This Blog is Part V in a series of Blogs designed to provide business owners with a high-level overview of the legal process for collecting on past-due accounts receivables.  Specifically, Part V focuses on garnishing a debtor’s bank accounts in order to satisfy the outstanding judgment debt.

The right of a judgment creditor to garnish the accounts of the judgment debtor is provided in Chapter 77, Florida Statutes.  If the debtor has, for example, a banking relationship at a national bank, such as Wells Fargo, this garnishment process allows the creditor to commence a garnishment action on Wells Fargo, as the garnishee, to execute on the debtor’s assets held by Wells Fargo.  In other words, a garnishment action against a garnishee is a proceeding that is ancillary to the original action against the debtor.

The creditor can begin the garnishment action against a garnishee ten days after the entry of the final judgment against the debtor.  The ten-day waiting period is due to Florida law giving the debtor ten days to appeal the trial court’s decision awarding a judgment in favor of the creditor and against the debtor.  After those ten days have expired, the creditor’s first step is to file a motion for writ of garnishment, along with the proposed writ, in which the creditor makes the garnishee a named party to the action.  The creditor must also deposit a filing fee with the Clerk of the Court, which covers the writ fee, the court registry fee and $100.00 to the garnishee’s attorney for having to answer the writ.  In Duval County, Florida, the total fee to secure a writ of garnishment is $188.00.

If the debtor were to know a garnishment action had commenced against the bank, the debtor, through quick action, could remove the funds and close the account prior to the garnishee seizing the debtor’s assets.  To avoid that situation, Florida law does not require the creditor to serve a copy of the motion or the writ on the debtor prior to serving the writ on the garnishee.  Garnishment, therefore, comes with an element of surprise, making it a very powerful collection tool for creditors, and the first one that creditors should utilize.

Many times, simply the process of garnishing the debtor’s bank accounts leads to immediate settlement negotiations and a possible installment payment plan through which the debtor satisfies the judgment debt owed.  This is because once a garnishee is served with the writ, it must freeze all of the debtor’s accounts, as those accounts are now seized by the creditor.  As a result, debtors are precluded from using those accounts for business transactions and/or daily expenses while the writ is active.  You can imagine how such a scenario transforms a previously-unresponsive debtor into a debtor now willing to enter into a payment plan agreement so that he or she may have access to those accounts once again.

In order to collect the debtor’s garnished funds successfully, the creditor must follow strict statutory requirements after the writ of garnishment is served on the garnishee.  A few of these requirements include, but are not limited to, the following:

  • After the writ is served on the garnishee, the motion and the writ must be delivered to the debtor.  Fla. Stat. § 77.041.
  • The creditor must also send to the debtor a “Notice to Defendant,” informing the debtor of his or her rights against garnishment, along with a list of possible exemptions that the debtor can claim.  This notice must be sent to the debtor’s last known address by first-class mail within five business days after the writ is issued or three business days after the writ is served on the garnishee, whichever is later. This notice is required if the debtor is an individual, but not required if the debtor is a business entity.  Fla. Stat. § 77.041.
  • After these items are sent to the debtor, the creditor must file certificates of service with the court, providing evidence that the above-mentioned information was sent to the debtor.  Fla. Stat.  § 77.041(2).
  • Once the garnishee answers the writ, which must be done within twenty-days of it receiving the writ, the creditor must service notice of the garnishee’s answer, along with the answer itself, to the debtor within five days of receiving the garnishee’s answer.  Fla. Stat. § 77.055.

As mentioned above, the debtor is able to claim exemption from garnishment in certain situations.  These situations can include, but are not limited to:  (1) the debtor being the head of household; (2) the debtor’s bank account assets consisting of social security benefits; or (3) the debtor providing more than one-half of the support for a child or other dependent.  If the debtor plans to claim an exemption, it must do so within twenty days of receiving the creditor’s Notice to Defendant.  If the debtor does make a claim for exemption, the creditor then has three business days in which to contest it, and the court will then schedule a hearing on the matter.

As this blog explains, garnishment can be very rewarding to the creditor, but the process includes strict statutory requirements and deadlines that must be followed.  Stay tuned for Part VI of this series, which will focus on another form of garnishment – a “continuing writ of garnishment” issued to the debtor’s employer.

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