Wage Garnishments Gone Wrong

When someone obtains a judgment against another, the person or company with the judgment becomes a judgment creditor, while the party against whom the judgment was rendered becomes a judgment debtor. A judgment creditor has several available options when trying to collect money from the judgment debtor. One such option is a wage garnishment.

Generally, to perform a wage garnishment, the judgment creditor files it with the appropriate court and obtains service of process on the judgment debtor's employer. In other words, proper notice must be given to the employer who is being asked to pay the judgment debtor's wages directly to the judgment creditor. If proper notice is given, and the employer refuses to cooperate, the judgment creditor can seek a judgment directly against the employer. In other words, the employer, who had nothing to do with the underlying lawsuit, could be on the hook for the full amount owed.

The recent case of Cash America International, Inc. v. Geico General Ins. Co. touches upon the potential perils when an employer ignores a wage garnishment, but, equally importantly, reinforces the hard and fast rule that the judgment creditor's failure to properly give notice to the employer voids the proceeding (as if it never occurred). In the Geico case, Geico first set in motion the wage garnishment by hand delivering a copy of the garnishment to an hourly employee at a local branch who had no management authority. This "notice" wasn't sufficient and the subsequent judgment Geico obtained against the employer was deemed void, long after both sides spent a lot of time and money in litigation.

Why is all of this important? First, anytime you receive documents from a court, it is important to share those with your attorney so that a plan to respond can be made. Simply ignoring such papers is not typically a sound approach. Second, companies may consider putting in place basic employee training of what to do if they receive court documents. Had the hourly worker been trained properly, the employer may have been able to avoid much of the hassle it endured. Third, if you are owed money, an attorney can work with you to determine whether or not it makes economic sense to pursue a claim against the debtor. In the case where the debtor is gainfully employed such as in Geico, it may make sense to explore collection avenues. A wage garnishment, done properly, can chip away at the judgment much like an annuity.