What is a Garnishment Bond?

Garnishment Bond is a type of judicial bond provided by the defendant to secure the release of property reached by a garnishment.

This bond also ensures that if the plaintiff wins the case, the defendant’s property (assets, wages, financial accounts) will be released to the plaintiff. The third party that holds the financial assets or property of the defendant must hold onto the financials or property until a judgment is made.

Should the court rule in favor of the defendant, the Garnishment Bond will provide a financial remedy where the plaintiff pays damages and costs if the writ is proven to be wrongfully sued.

It is also similar to the Release of Attachment Bond.

What is "Garnishment"?

A garnishment is a form of legal proceeding (and drastic measure) that enables someone (the plaintiff) you financially owe seize your property and assets as payment.

A garnishment is a percentage of your wages, and bank account balances up to the amount you owe which may be taken without your permission to satisfy a debt.  Bank account seizures often occur with joint accounts. If you are a joint account holder, money is often seized along with your balances as debt repayment.

Garnishments are not limited to bank accounts and wages. If your wages are garnished for multiple debts, it may lead to loss of employment. Since garnishment involves seizure of property, the procedure is subject to due process requirements.

A Federal Law, called Consumer Credit Protection Act, Subchapter II,  applies to all fifty states, the District of Columbia, and all U.S. territories and provides the maximum allowable garnishment. Garnishment is regulated by state statutes and is reserved for creditors (plaintiffs) who have obtained a judgment, or court order, against the debtor (defendant).

 

What are the exemptions to Garnishment?

To avoid leaving debtors with no means of support, state statutes have created property exemptions.

For instance, as stated in the Consumer Credit Protection Act, work income may not exceed 25 percent of the debtor's disposable income each week. In some states, such as Alaska, exemptions may include medical, surgical, or hospital care benefits, retirement plan assets, work health aids, burial plot plans, and even awards given to victims of violent crimes. (Alaska Stat. § 09.38.015, .017).

 

Garnishment vs. Attachment

Garnishment, while similar to lien and attachment, is NOT an attachment. Liens and attachments are court mandates that give creditors interest in the debtor's property. Attachment is the process of taking the property of the debtor that is in the debtor's possession, whereas garnishment is the process of seizing a debtor's property that is in possession of a third party or garnishee (bank, employer, etc.).

A Garnishee is a third party ordered by the court to surrender money to settle debts and claims.

 

Why is there a need for a Garnishment Bond?

A Garnishment Bond ensures payment of all damages and costs that may accrue to the defendant if the writ is deemed wrongful and unjust.

The bond also guarantees the court that the plaintiff has no prejudice or malicious intentions when making a garnishment claim against the defendant.

Garnishment Bond Example Scenario:

Miss Lockheart is filed a lawsuit by her creditor for non-payment of her debts. A junior executive in a telecommunications firm, her employment wages have been seized as directed by a court order on behalf of her plaintiff creditor. If her work earnings are garnished, a portion of her wages owed by the employer will go directly to the Judgment Creditor without her access and permission.

She procures a Garnishment Bond to protect the creditor's interest in her assets and property. She cannot have access to her wages and bank accounts where her wages were deposited until the court has made a decision.

If there is evidence that her creditor has made wrongful and unfair claims against her, she will be able to collect the damages. If the creditor prevails in the case, the Surety's role is to financially guarantee the release and access of her wages and other assets and property to the plaintiff.

 

How much does a Garnishment Bond cost?

The bond premium is 1% of the bond amount with a minimum fee of $100.

The bond amount may vary from state to state, or determined/set by the presiding judge.

If you would like to learn about the Garnishment bond costs, you can get your FREE quote here!

 

How do I get a Garnishment Bond?

Selecting a certified surety company is your first step to obtaining a Garnishment Bond.

You will need to submit a bond application and agree to a personal or business credit check which will be conducted and evaluated by a surety underwriter. Information about your financials will be kept in strictest confidence and will be only used for the exhaustive underwriting process.

Requirements for getting the bond may include:

  • Completed bond application
  • Copy of court order or judgment that requires the bond
  • Credit release form as required
  • Financial documents (income statements, bank account balances, personal and business statements, irrevocable lines of credit, etc.)

If you have any further questions or would like to learn more about Garnishment Bond, please feel free to contact us!

Check out this Infographic!

Have a better view of Garnishment Bond through this infographic.

Garnishment Bond Infographic
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