January 12, 2009
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News: Non-Wage Garnishment.
There is a second form of garnishment that few people talk about. Most people think of wage garnishment when the term ‘garnishment' is mentioned. But, the unspoken other form is called ‘non-wage garnishment'. In the first case, wage garnishment has the built-in protection of leaving an employee enough income to survive. It is based on the person having enough income to even attach while still being enabled to work. In this case, credit card companies have greater restrictions than the federal or state governments concerning what can be attached from an employee's wages. For example, the government entities do not need a court order to take action. A credit card lender does. Secondly, the government entities can, in fact, attach the protected (and required) withholding deductions like Social Security and FICA. Credit card lenders can't get to these.
The other form of garnishment (non-wage) involves assets other than those linked to employment. These are especially applicable to cases where the person either isn't working or quits a job to avoid garnishment of wages. The first thing that happens in these cases is for the person's assets to be ‘frozen'. When this happens, of course, a person might have great wealth but will be unable to access any of it. It's been temporarily locked by the courts. This becomes more complicated and credit card lenders prefer to avoid it, whenever possible. The first lock goes on the person's bank accounts. The banks hate this. Things get more complicated after this. Tricky protection areas come into play like veteran's disabilities and Social Security disability payments. Federal law, generally, prohibits attaching these. But, even these are challenged and the burden of protection is placed on the person being garnished. Without defending one's rights, even these could be taken by the credit card lender.
The banks holding these monies are put to great stress. They must now segregate these assets, as prescribed by law. They, too, become liable. With all the chaos involving so many players, some states like New York, California and Connecticut have stepped up to simplify things. In addition, the many government benefit agencies and inter-agencies, as well as banking inter-agencies are all collaborating toward a common consensus in hopes of providing a simplified federal model. With credit card defaults projected to skyrocket this year, this action could come none to soon.