Jeffrey L. Smoot Oles Morrison Rinker & Baker LLP 701 Pike Street, Suite 1700 Seattle, WA 98101 (206) 623-3427 smoot@oles.com GARNISHMENT PROCEDURE IN WASHINGTON by Jeffrey L. Smoot Author s Note: This article has evolved from a Avvo Legal Guide first published in 2010. Copyright 2014 by Jeffrey L. Smoot. Published for informational purposes only, and may not be reproduced in whole or in part without the author s express written consent. A Writ of Garnishment is not to be trifled with, as many a layman has found, to his cost. It can only be prudently dealt with by going to the expense of employing an attorney. Knettle v. Kennett, 12 Wn.2d 261 (1942) Garnishment procedure in Washington is governed by RCW 6.27. Garnishment is a statutory procedure to compel a third party to withhold money or property owed to a judgment debtor so it may be applied to pay a judgment debt. A creditor with a judgment can have a writ of garnishment issued to the debtor s employer, bank, or anyone else who owes money to the debtor or holds property belonging to the debtor. A. Garnishment Process 1. Issuance of a Writ of Garnishment Once you have a judgment, and after the applicable stay of execution has passed (10 days in superior court, 30 days in district court), you can start the process. The court clerk will issue a writ of garnishment, for a fee, without prior notice to the debtor upon submission of an affidavit or declaration of the judgment creditor attesting that there is an unsatisfied judgment against the debtor and that the judgment creditor has a good-faith belief that a bank, employer, or other person has money or property of the debtor or owes the debtor 1
money. In district court cases the creditor s attorney can self-issue the writ on the same grounds. RCW 6.27.020. There is a separate form of writ for garnishment of financial accounts and earnings. See RCW 6.27.080 (financial institutions),.100 (general), and.105 (continuing lien on earnings). The creditor must prepare and submit the appropriate forms; the clerk merely accepts and stamps the writ and hands it back so it can be served. 2. Service of a Writ of Garnishment Once the writ has been issued, it must be served on the bank, employer, or other person believed to be holding funds or property of the debtor the garnishee defendant or garnishee for short by personal service or certified mail. RCW 6.27.110. Written proof of service is required, such as an affidavit of service or the signed return receipt in the case of mailing. The writ must be served with a blank answer form and a $20 check payable to the garnishee (except wage garnishments). In addition, a copy of the writ must be served on the debtor along with the affidavit upon which it was issued, a copy of the judgment, exemption claim form, and statutory notice of garnishment rights. Strict compliance with the service and notice requirements is required; failing to include the answer form, check, failing to give the judgment debtor the proper notice, or even failing to include the attorney s or court s address in the writ, could invalidate the garnishment and result in an award of attorney s fees to the debtor or garnishee defendant. Financial institutions are authorized to designate their office for service of writs of garnishment naming the institution, and not the branch, as garnishee. RCW 6.27.080. Some banks allow service on any branch as effective on the institution, while others authorize service at only one location in the state or outside the state in the case of one institution that recently moved its authorized service location to Los Angeles. RCW 6.27.130(1) requires that the debtor be personally served or served by certified mail and, if by mail, that the notice be deposited in the mail on or before the date of service of the writ. To maintain the element of surprise, it is common practice to personally serve a bank so the writ is effective immediately against all funds on deposit and serve the judgment debtor by certified mail immediately after (same day) so he or she does not get advance notice of the writ and empty the bank account before the bank is served. 3. Effect of a Writ of Garnishment Upon service, the garnishee must hold all payments it owes to the debtor and all funds or property of the debtor in its possession. RCW 6.27.090,.120. A bank must hold all funds on deposit in the debtor s name and place a freeze on a safe deposit box if the writ names and is served on the branch holding the safe deposit box. An employer must withhold a percentage of the debtor s earnings depending on the available exemption. See RCW 6.27.150. 2
The garnishee defendant must file and serve an answer to the writ, stating whether anything was withheld, and what was withheld. RCW 6.27.190. The answer must be filed and served within 20 days of the date of service. The creditor may then obtain a court order directing the garnishee defendant to pay over that money or property to the court, and once tendered to the court it will be disbursed to the creditor and applied to the judgment debt. 4. Continuing Lien on Earnings A wage garnishment, or continuing lien on earnings, is effective for 60 days from the date of service of the writ. When served with a wage garnishment, an employer must file and serve a first answer form within 20 days indicating whether the debtor actually works there and, if so, confirming that wages are being withheld. A second answer form must be submitted to the employer after 60 days, and the employer must file and serve a second answer indicating the total amount of wages withheld. An employer can withhold up to 25% of a debtor s earnings under a wage garnishment; the remainder is exempt and must be paid to the debtor by law. A creditor must have a new writ issued and served every 60 days to continue garnishing wages, until the judgment is satisfied. 5. Controversion of Answer If the judgment debtor or judgment debtor does not agree with the answer, for any reason, he or she may controvert the answer. RCW 6.27.210,.220. This requires filing an affidavit stating in particular why he or she believes the answer is wrong. The controverting affidavit must be filed within 20 days of the filing of the answer and served on the other party and the garnishee. Controversion often occurs when an employer s answer to the Writ of Garnishment is false or inconsistent, e.g., claiming the employee does not work there, is not earning enough money for withholding, fails to account for year-end or other bonus or commission earnings, or when the garnishee backdates payments to the debtor to make it appear payment had already been made prior to service of the writ. If the judgment creditor knows the answer is wrong, and can prove it, he or she should not hesitate to controvert the answer. If the creditor suspects the answer is incorrect, it can issue a subpoena for records under CR 69(b) to investigate before controverting the answer. If the controverting affidavit is disputed, it must be answered within 20 days by affidavit. After that 20 days has passed, any party may note a court hearing to determine whether a trial is necessary regarding the issue of whether or not the answer is correct. At the hearing, the court will consider the controverting affidavit and response, and could decide that the answer is correct, in which case the defending party is entitled to an award of attorney s fees and costs; or that the answer is wrong, in which case the controverting party is entitled to an award of fees and costs. RCW 6.27.230. Or the judge may decide the issue is too complex to be decided solely on the affidavits, and order a trial on the issue. See RCW 6.27.220 regarding controversion procedure. 3
6. Failure to Answer If a garnishee fails to answer the writ within 20 days of the date of service, the creditor can seek entry of a default judgment against the garnishee, but only after serving a notice on the garnishee that failure to answer within an additional 10 days will result in the filing of a motion for entry of default judgment. RCW 6.27.200. If the garnishee still fails to answer, the creditor can submit the motion on an ex parte basis, with proof of service of the 10-day notice, and obtain entry of a judgment against the garnishee for the full remaining unpaid balance of the judgment, together with attorney s fees and costs incurred in the default process. The garnishee gets one more chance to avoid the default judgment: it must file a motion to vacate the judgment within seven days of service of execution on the judgment. The garnishee would be liable for payment of reasonable attorney s fees and costs incurred by the creditor in addition to payment of the amount it should have withheld from the debtor under the writ. 7. Debt Not Yet Due If the garnishee s answer indicates that the garnishee is indebted to the debtor but the indebtedness is not matured and is not due and payable (such as future payments that will become due under a note, contract, or lease), the court will enter an order requiring the garnishee to pay the debt into the court registry when it becomes due. RCW 6.27.250(2). There is case law that suggests that future rental payments cannot captured by a writ of garnishment. See Barkley v. Kerfoot, 77 Wash. 556, 558 (1914) (covenant to pay future rent, even under a lease, is too uncertain and contingent to be regarded as an absolute, present but not matured indebtedness within the meaning of Washington garnishment statute); followed by Elliott v. Franke Tobey Jones Home, 2003 Wn. App. LEXIS 1238. 8. Delivery of Property If the garnishee s answer indicates that the garnishee has possession or control of personal property or effects of the debtor, the court will enter an order requiring the garnishee to deliver up to the sheriff, on demand, such personal property or effects. RCW 6.27.270. That property can then be sold by the sheriff in the manner of a personal property execution. 9. Garnishment Costs In superior court, the garnishing creditor can recover statutory fees and costs including attorney fees of $100 or 10% of the judgment balance, whichever is greater, not to exceed $300. RCW 6.27.090. B. Common Garnishment Problems and How to Avoid Them Ideally, the garnishment process will go smoothly from start to finish. Unfortunately, there are situations that commonly arise during the garnishment process that prevent this. 4
1. Prior Writ in Effect Some employers assume that if a garnishment is in effect when a second writ for continuing lien on earnings is served, the second garnishment is automatically superseded by the first. Others have answered that, because there was already a garnishment in effect, no funds were withheld; they failed to take any further action, and were surprised to receive a notice months later that they were in default and a judgment would be entered if they did not submit a second answer within 10 days. Think of successive garnishments as freight cars on a train; they line up behind each other and are loaded one after the other. Each successive continuing lien garnishment is entitled to a full 60-day withholding period, which begins immediately after the previous garnishment has expired. Writs of Garnishment are polite: they take turns. Except, that is, for garnishments issued in the same case, which do not automatically have priority over garnishments from other creditors. If another garnishment is served between effective dates of two same-case writs, it has priority over garnishments from the same case. When multiple garnishments are served on the same day, the garnishment served first is effective first. So a garnishment served at 10 a.m. has priority over a garnishment served at 10:05 a.m. If there is confusion, check your declaration of service. What if more than one garnishment is received at the same time, such as by certified mail? In that case, the garnishments take priority in the order they are answered assuming, of course, that the time of answer can be determined. 2. Multiple Garnishments Against One Employee Washington law forbids firing an employee just because his or her wages are garnished. RCW 6.27.170. This does not mean the employer will not terminate the employee anyway, or for other cause. The terminated employee may have a wrongful termination claim if this occurs, but the garnishing creditor 3. Child Support Garnishments If a garnishment is based on child support, up to 60% of an employee s non-exempt earnings may be withheld under the writ, since the employee would be allowed only a 40% exemption (or 50%, depending upon whether he or she is supporting another family and asserts an exemption claim). Of course, the employee still must be paid the federal minimum amounts, no matter what kind of garnishment involved. A garnishment for child support must still state continuing lien on earnings to be valid for 60 days. Garnishments for child support have priority over almost any other kind of garnishment. RCW 6.27.360(2). The only type of garnishment entitled priority over a child support garnishment or wage assignment order is a notice of payroll deduction issued by the Office of Support Enforcement. A notice of payroll deduction from the OSE has priority 5
over any wage assignment, garnishment, attachment, or other legal process. RCW 26.23.060(4). 4. IRS Levy Similar to an OSE notice of payroll deduction is an Internal Revenue Service notice of levy. An IRS notice will direct withholding of a certain amount from the employee s wages, or up to 50% of net earnings. An IRS notice has priority over other garnishments, except garnishments for child support. Generally, wage garnishments, wage assignments, and other wage levies have the following priorities: 1. OSE notice of payroll deduction (administrative order); 2. Public Assistance notice of payroll deduction (administrative order); 3. Tie (first in time) between: Mandatory wage assignment for child support or spousal maintenance (court order); Voluntary wage assignment for child support or spousal maintenance (court order); Writ of Garnishment for child support (court issued); 4. IRS levy (administrative order); 5. Writ of Garnishment (issued pursuant to RCW 6.27); 6. Voluntary wage assignment (not for child support). A common misconception is that, once an OSE notice of payroll deduction, wage assignment, or IRS levy is in effect, it renders all other garnishments ineffective. Although usually that is the case, it is not automatically true. Even though a wage assignment is in effect, there may still be non-exempt earnings available for withholding under the writ, but only if the amount being withheld under the wage assignment is less than 25% of the employee s net earnings (or 60% in the case of a child support garnishment). The test is simply: Is the order taking more or less than 25% of your employee s net earnings? If less than 25%, then under the new garnishment the difference between the order and 25% of net earnings could be withheld. (In the case of a child support garnishment, use 60% in the above calculations.) The current state garnishment answer form provides for deduction of any OSE or IRS levy amounts from the employee s non-exempt earnings, making it much easier to calculate. 6
5. Exemption Claims Within 28 days of service, the debtor may claim that the property being garnished is exempt. State law provides that certain property is exempt from garnishment, such as retirement accounts, unemployment compensation, and disability payments. For example, if a bank account holding only unemployment or social security benefits was garnished, it could be claimed as exempt. If a debtor claims an exemption, the creditor must either dispute the exemption claim or release the funds within seven days. If disputed, a hearing is held to determine the validity of the exemption claim. The losing party could have to pay the other party s attorney fees. 6. Insufficient Earnings State and federal employment laws have fixed minimum amounts which must be paid to employees regardless of garnishments and wage levies. These amounts must be stated in a continuing lien garnishment. They are the greater of either: (1) Thirty times the federal minimum hourly wage at the time the earnings are payable; or (2) Seventy-five percent of the disposable earnings of the defendant. The federal minimum amounts must be stated in the answer form. If those amounts are not provided, or the amounts provided are incorrect, the garnishment may be declared invalid. The federal minimum amounts usually come into play with part-time employees, or unskilled laborers earning at or near minimum wage. The federal-minimum rule provides an unintended shelter for part-timers, who can render their earnings garnishment-proof by holding only part-time jobs, thus never earning more than the federal minimum at any one job. 7. Tip Income Restaurant owners face a common problem when it comes to garnishments directed to their waiters and waitresses: how to account for tips? In some restaurants, this problem seems easily resolved due to pooling of tips and distributing them to employees on a given shift; the employer can simply deduct 25% of the garnished employee s share of the tips and hold it under the writ. Or the employer s practice may be to hold tips paid by credit or debit card and pay them to the employee later. Because the employer has possession and control of tips paid by debit or credit card, common sense dictates that the employer must account for those tips when answering and withholding under a writ of garnishment. 7
In most cases, there is really nothing the employer can do about cash tips, since the employer technically does not owe the tips or hold them for the employee they are gratuitous gifts from customers. So unless the employee is willing to voluntarily account for tips and withhold from them herself, or unless the employer requires pooling tips and distributes them to employees, the creditor may be powerless to garnish them. 8. Answering Improperly There are various ways to improperly answer a writ of garnishment. The most common are: Failing to sign the answer; Leaving blank spaces that are required to be filled in; Not filling in correct dollar amounts; Addition and multiplication errors; Insufficient withholding; and Overwithholding. An unsigned answer is deemed a failure to answer. This is usually easily cured by sending the answer back to the garnishee with instructions to answer, or via a 10-day notice of default. When there are math or withholding errors, the answer deserves closer scrutiny and may justify controversion. 9. Employee Quits or is Fired If an employee quits, is laid off, or is terminated during the 60-day withholding period, withholding will cease as of the last pay period. If the employee is re-hired during the 60 days, withholding will recommence. In some cases, an employee quits or is laid off when a garnishment is served, then is re-hired after the employer has answered the writ by stating the employee no longer works here. Typically, the employer approves of and aids in this ruse or other similar schemes to evade the garnishment, such as: Paying wages under the table to avoid reporting them in the answer. Agreeing not to pay the employee, who keeps working, until after the 60- day effective period of the writ has elapsed. Laying off the employee so he or she can draw unemployment benefits while the garnishment is pending, then re-hiring the employee as soon as the writ is no longer effective. 8
Giving the employee a pre-dated advance paycheck to avoid withholding under the garnishment. Even if the judgment creditor does not find out about this charade during the 60-day effective period of the writ, it may assert a claim against the employer for fraud or civil conspiracy if it finds out later on. A subpoena to the employer for employment, payroll and accounting records can be helpful in uncovering these types of schemes. 10. Wage Assignments Another type of wage withholding occurs under a wage assignment, which is a voluntary agreement by the employee to allow a certain amount of his or her wages to be paid to a judgment creditor. (Not the same as a wage assignment for withholding of child support, which is court ordered.) Typically this arrangement is made after the judgment creditor has garnished once or twice, and the employee realizes the judgment creditor is not going to go away. Also, since up to $400 attorney s fees and taxable costs are charged to the employee each time a garnishment is issued, it will save the employee hundreds perhaps thousands of dollars to agree to a voluntary wage assignment in lieu of continuing garnishment. The wage assignment can take many forms, usually depending upon the employer s requirements. Some employers require a court order; others require a formal, notarized assignment; others require only a letter signed by their employee; others require only verbal directions from their employee; some employers refuse to allow assignment of wages except by court order. The benefit to the creditor of a voluntary wage assignment is a continuing stream of payments from the debtor s earnings without accruing the ongoing costs and hassles of repeated garnishments. However, if a garnishment from another creditor is served while a wage assignment is pending, the wage assignment does not have priority over the garnishment because it is not a mandatory deduction nor a prior garnishment. If that occurred, the creditor would have to issue a new writ of garnishment and get back in line. 11. Debtor Files Bankruptcy Pursuant to Section 362 of the Bankruptcy Code, all actions against the bankrupt debtor s assets are stayed pending the conclusion of the bankruptcy case. This includes garnishments by judgment creditors. Because of the stay, the judgment creditor has an affirmative duty to cease collection efforts, and to quash the garnishment. Unless the debtor has properly claimed any withheld funds or property as exempt, the creditor should inform the trustee of the withheld funds or property so they can be delivered to the trustee for administration in the bankruptcy estate. 9
12. Wrongful Garnishment If a garnishment is wrongfully issued, the creditor can be liable for any damages suffered by the debtor. For example, if the creditor obtains a writ of garnishment prior to the entry of the judgment on the execution docket, or prior it the 10-day stay of execution provided in CR 62(b), the creditor could be liable for the debtor s damages, including lost profits, that result from the wrongfully issued garnishment. -o0o- This article is for informational purposes only, and should not be relied upon as legal advice. No attorneyclient relationship is created or intended by publication of this article. If you desire legal advice or representation regarding the issues discussed in this article, please contact the author. 10