Florida Head of Family Exemption Bank Funds Garnishment
Recent Changes to Florida's Wage Garnishment Exemption
Since the financial crisis of 2008, the economy has been improving, albeit at a slower pace than many would like, and the stock market has seen meaningful gains. Nonetheless, unemployment is nonetheless relatively high and the residential and commercial real manor markets accept not even so rebounded as many had hoped. Many individuals continue to face fiscal hardship, job loss, foreclosure, and bankruptcy. And while individuals confront challenges paying their creditors, banks and other lenders — although ofttimes viewed with less sympathy in the current economical climate — face challenges collecting payments from borrowers.
Recently the Florida Legislature amended F.S. §222.11, the statutory exemption of an individual'south earnings from wage garnishment. The amendment of §222.11 modified Florida's wage garnishment exemption and afforded greater protection to debtors. Specifically, the subpoena increased the amount of a debtor'south exempt disposable earnings and also added certain requirements to the wage garnishment exemption waiver. Awareness of these changes is of equal importance to both borrowers and lenders.
The Fundamentals of Garnishment
Garnishment is a statutory remedy governed past F.South. Ch. 77, and is used by creditors to collect debts owed by debtors. Garnishment is nearly oftentimes used as a post-judgment remedy to collect a debt owed by the "judgment debtor," which is the party against whom the judgment is entered.1 A writ of garnishment is an order issued past the court, whereby the "garnishor" — the creditor who brings the garnishment activeness — procures a lien on personal property of a judgment debtor in the possession of a third party, referred to as the "garnishee."two After a writ of garnishment is issued, the garnishor, garnishee, and judgment debtor are afforded opportunities to respond, affirm defenses, and claim and dispute exemptions.iii
Garnishment may exist used in a variety of circumstances. For example, a writ of garnishment may exist used to recover money held in a judgment debtor's depository financial institution business relationship.iv When such a writ is issued, the banking company/garnishee will often freeze the account and apply the funds, subject to any exemptions, to satisfy the judgment of the garnishor. A writ of garnishment too may be used to recover tangible or intangible personal property of the judgment debtor in the possession of another.5 When a court issues the writ, the garnishee will have to surrender the property to the sheriff, who will sell the property in a public auction in order to satisfy the garnishor'south judgment.6 Additionally, a writ of garnishment may be used to collect portions of a judgment debtor'due south wages through issuance of a continuing writ of garnishment to the judgment debtor'south employer.7 A continuing writ of garnishment provides observe to the employer/garnishee to withhold periodically a portion of the judgment debtor'south earnings, which will then be paid to the garnishor until the judgment is satisfied or otherwise directed past the court.8
Wages Exempt from Garnishment under F.Southward. §222.11
• Requirements of the "Head of Family unit Exemption" — A creditor has a correct to garnish a judgment debtor's wages, subject to the exemptions fix along in §222.11. If a judgment debtor is considered a "head of family," §222.xi exempts a judgment debtor'south "disposable earnings."
Whether a judgment debtor is a "head of family" is adamant by the statutory definition in §222.eleven(ane)(c). A "caput of family" is defined as a person who provides more than than one-half of the support of a child or other dependant.9 If a judgment debtor does not qualify as a caput of family, then his or her disposable earnings will not exist protected under the "head of family exemption." In addition to the head of family requirement, the exemption under §222.11 is limited to the "disposable earnings" of a judgment debtor. "Earnings" is broadly defined as budgetary compensation for labor and personal services.x Even so, earnings are not exempt under §222.11 if they are not received as regular or stock-still compensation dictated by the terms of an arm's length employment agreement.11 Further, but " disposable earnings" are exempt from garnishment, which are the judgment debtor'south earnings after withholdings required by constabulary.12
• Claiming and Disputing the "Head of Family unit Exemption" — There are two ways to properly claim the "head of family unit exemption." First, the judgment debtor can file an exemption form within twenty days of receipt of the notice of garnishment provided past the garnishor.xiii The garnishor and then has a brusque period of time to object to the claimed exemption past filing a sworn statement battling the exemption ( i.e., three business concern days if the detect is served by hand delivery, and viii business days if it is served by mail).14 Alternatively, the judgment debtor may claim the exemption by filing a "caput of family" affidavit, asserting that the coin attached is from labor or personal services and that he or she is the caput of family unit.15 A garnishor is given an opportunity to dispute the claimed exemption past filing a sworn statement disputing the exemption within 2 business days of receipt of the judgment debtor's head of family affidavit.16
If the judgment debtor qualifies for and properly claims the "head of family exemption," then the judgment debtor is afforded two levels of protection from wage garnishment. Kickoff, the disposable earnings of the judgment debtor upwardly to $750 per week are automatically exempt from garnishment. No exceptions. Second, all disposable earnings greater than $750 per week are exempt, unless the exemption is affirmatively waived by the judgment debtor in accordance with §222.xi.
• Further Protections Afforded by the CCPA and § 222.eleven — Dissever and autonomously from §222.eleven, the Consumer Credit Protection Act (CCPA), xv UsaC. §1673, limits the amount a creditor may garnish. The CCPA, subject to sure exceptions, restricts garnishment of a judgment debtor's dispensable earnings to the bottom of ane) 25 percent due each pay period, or 2) the amount by which the disposable earnings for the pay menstruum exceed 30 times the federal minimum hourly wage.17
The CCPA is incorporated into F.S. §222.11, providing farther protection from garnishment. This protection is afforded irrespective of a debtor'southward ability to satisfy the "head of family exemption" under §222.11. For example, if a judgment debtor does non qualify for the "caput of family unit exemption," and so his or her disposable earnings may be garnished, bailiwick to the restrictions under the CCPA. The CCPA also applies when a judgment debtor qualifies for the "caput of family unit exemption" but has waived his or her correct to the exemption of disposable earnings greater than $750 per calendar week. In this context, the CCPA limits the corporeality of dispensable earnings that may be garnished, earnings which would otherwise be subject to garnishment.
Additionally, disposable earnings of a judgment debtor that are 1) exempt nether either the "head of family exemption" or the CCPA, and 2) deposited in a financial establishment, are exempt from garnishment for half-dozen months after the earnings are received by the fiscal establishment.18 Still, if such disposable earnings cannot be traced and properly identified as earnings, and then the dispensable earnings are not afforded the half dozen-calendar month exempt status and will be subject to garnishment.
2010 Changes to F.Southward. §222.11
In Oct 2010, the Florida Legislature amended the "head of family exemption" under F.S. §222.eleven in two cloth means. Commencement, the amendment inverse the amount of dispensable earnings that are automatically exempt from $500 to $750 per week.nineteen Second, and more importantly, the amendment created boosted requirements for a creditor to obtain a valid and enforceable waiver of the garnishment exemption (referring to the exemption of dispensable earnings in excess of $750 per week).20
The statute at present requires the waiver of the judgment debtor to be stated on a separate document, and, therefore, cannot exist inconspicuously located in an agreement or contract.21 Also, the waiver must be written in the same language every bit the contract or agreement to which the waiver relates.22 Finally, the waiver must be in at least fourteen-point font and "substantially" in the following form:
If you provide more than one-half of the back up for a child or other dependent, all or part of your income is exempt from garnishment under Florida police. Y'all can waive this protection only past signing this document. signing below, you agree to waive the protection from garnishment.
It is evident that the amendment of §222.eleven reflects an intent of policymakers to provide greater wage protection to judgment debtors and also increment awareness of the right to claim (or not waive) the exemption. Given the amendment's cloth modify to the exemption waiver, lenders, especially banks, need to be enlightened of the modify and incorporate the new waiver requirements into their loan documents. It is also worth noting that the subpoena of §222.xi is not given retroactive awarding and, therefore, the new waiver requirements apply to contractual agreements executed afterward October 1, 2010.
The garnishment wage exemption nether §222.11 continues to provide judgment debtors considerable protection, enabling a debtor to exempt meaning amounts of dispensable earnings for up to 6 months. While garnishment can be an effective tool for collecting judgments, the garnishment wage exemption can serve equally an impediment to drove from an otherwise financially solvent judgment debtor. If lenders neglect to understand and business relationship for the contempo changes under §222.xi with respect to the garnishment exemption waiver, or alternatively, if debtors are aware of the exemption and choose not to waive it, then the effectiveness of wage garnishment may exist substantially limited.
1 Fla. Stat. §§77.03, 77.031.
ii Fla. Stat. §77.06(1).
iii Fla. Stat. §§77.04, 77.061, and 77.07.
4 Fla. Stat. §77.01.
5 Id.
6 Fla. Stat. §77.14.
seven Fla. Stat. §77.0305.
8 Id.
9 Fla. Stat. §222.xi(1)(c).
10 Fla. Stat. §222.11(one)(a).
11 See In re Branscum, 229 B.R. 32, 34 (M.D. Fla. 1999) (property that monies earned by an independent contractor are not protected past §222.11).
12 Fla. Stat. §222.11(ane)(b).
13 Fla. Stat. §77.041(2).
14 Fla. Stat. §77.041(3).
15 Fla. Stat. §222.12.
16 Id.
17 15 U.S.C. §§1672(b) & 1673(a).
18 Fla. Stat. §222.xi(3).
19 Fla. Stat. §222.xi(2)(a).
twenty Fla. Stat. §222.11(2)(b).
21 Id.
22 Id.
Mark S. Mitchell is a partner with Rogers Towers, P.A., in Jacksonville, and focuses his do on bankruptcy, creditors' rights, and commercial litigation.
This cavalcade is submitted on behalf of the Business Police Section, Brian Keith Gart, chair, and Lynn Sherman, editor.
Source: https://www.floridabar.org/the-florida-bar-journal/recent-changes-to-floridas-wage-garnishment-exemption/
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