Small Claims Court & Garnishment
Many states allow individuals and businesses to settle their monetary disputes in small claims court. The system operates on a more informal basis than the standard civil court system. It deals with matters approximately $10,000 or less and functions faster. Generally, the basic process works the same from state to state, but differences do exist. If the judge decides you owe the creditor money, the creditor can enforce a court order procedure called a garnishment against your wages or bank account.
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Complaint
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The creditor must file the necessary paperwork in the appropriate court. Each county has specific instructions for serving a subpoena and complaint on the person who owes the money, or the debtor. Usually this occurs by certified mail, a process server or sheriff. The court clerk schedules a time and date for the hearing. Both sides get to present their side of the case. If the other side does not not show up, the judge will likely rule in your favor.
Hearing
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Some states allow attorneys to represent individuals in small claims court while others do not. In California, the laws allow the defendant to have an attorney. In addition, most states require a corporation to have a lawyer. Bring any evidence to support your side of the case, such as invoices, receipts, canceled checks and witnesses. The judge will listen, ask questions and decide on the matter.
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Judgment
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When a small claims court judge rules against a debtor who fails or refuses to pay a creditor money, the court hands down a judgment. It becomes the responsibility of the creditor to collect on the judgment. Usually, the creditor must wait 30 days before enforcing the judgment. Garnishment represents one of the most common methods for a creditor to collect on a judgment. Creditors may conduct a wage and/or a bank account garnishment. The creditor must obtain an order from the court called a Writ of Garnishment. The day before payday or when you think the debtor has money in the account represents the best time to serve the Writ of Garnishment.
Wage Garnishment
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The Writ of Garnishment orders the employer to pay a portion of the debtor's fund to the creditor. The law limits the garnishment to the lesser figure of 25 percent of disposable income or the portion of disposable income 30 times the federal minimum wage. Common deductions for calculating disposable income include federal, state and local taxes. Social Security, unemployment insurance and state employee retirement money must also come off the top.
Bank Garnishment
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Most states will only allow the Writ of Garnishment to put a hold on the money in the bank account at the time of receipt of the court order. The bank cannot pay any checks that come in or allow the debtor to withdraw money from the account. If the account has funds exceeding the amount of the garnishment, the bank can pay the checks as long as the sufficient funds remain in the account for the garnishment. Once the bank pays the garnishment, it can lift the freeze from the account.
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References
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