Understanding Garnishments in Texas: A Detailed Overview
Garnishment serves as a potent tool for judgment creditors seeking to collect what they are owed. Here's a comprehensive breakdown of how garnishments work in Texas:
What is Garnishment?
Garnishment empowers a judgment creditor (the party owed money) to collect from a debtor's assets, including bank accounts, stocks, or other valuable possessions. A writ of garnishment orders the bank or other third-party to withhold the debtor’s property (usually money) for delivery to the judgment creditor. In short, a writ of garnishment captures funds from the debtor’s account in question and those funds are then used to pay the judgment.
Requirements for Garnishment:
Before pursuing garnishment, the creditor must possess a valid and unpaid judgment against the debtor.
Additionally, the creditor must ascertain that the debtor lacks sufficient assets within Texas to satisfy the judgment.
The first requirement is essentially a final judgment that remains unsatisfied. The second requirement involves a search to determine if the debtor has sufficient non-exempt assets to satisfy the judgment without garnishment. Even where the debtor has some assets subject to execution which could satisfy part of the judgment, if the assets are insufficient to pay the entire amount owed, then a garnishment will be proper to satisfy what remains.
Steps to Get a Garnishment:
Finding the Right Account:
Once you've met all the requirements mentioned above, you need to find an account that can be garnished. If it's a bank account, knowing the exact account number isn’t required. It is enough to know which bank a debtor you’re collecting from uses. This information may be in documents you already have, like credit agreements or copies of the person's checks. Judgment creditors can also make post-judgement discovery requests for information after they’ve already won their case to get this info.
Filing Against the Third Party:
To garnish someone's bank account, a separate case against the bank or other third party (the “garnishee”) must be filed. This filing will be made in the same county where the judgment against the debtor was entered, but it's a new case with its own number. The suit against the third party is brought using an Application for Writ of Garnishment.
Filing the Application:
The judgement creditor will file its Application for Writ of Garnishment along with an affidavit. In the application, details about the original case and judgment must be included, like any payments the debtor has made toward the judgement (credits), proper information regarding the garnishee and where to serve garnishee, and the account number if available. Also required is an affidavit swearing that, as far as you know, the debtor does not have in its possession in Texas enough non-exempt property to satisfy the judgement.
Getting the Writ of Garnishment:
Once the application is filed, the court will issue a document called a "writ of garnishment." This tells the bank or third party to hold onto the debtor's money. Judgement creditors, or their attorneys need to make sure this document follows the rules in Texas Rule of Civil Procedure 661. Once the court issues the writ of garnishment, the judgment creditor needs to deliver it to the bank or whoever else has the debtor’s money. This is called serving the garnishee. You can serve the garnishee in any way that's allowed for serving legal papers, like mailing it or delivering it in person, as outlined in Rule 21a. For banks specifically, there are additional rules to follow, outlined in Texas Finance Code 59.008. If the bank has an agent in Texas, you serve the agent with the writ. If it's an out-of-state bank, it still needs to have a registered agent in Texas, and the writ must be served to that agent.
Note**: When the garnishment papers are served on the bank or other party holding the debtor's money, they must freeze all the money in the account. This includes any money the debtor adds after they're served. Usually, once debtors know about the garnishment, they stop putting money in the account. So, the creditor usually only gets the money that's in there on the day the garnishment papers are served.
There's a strategy here, too. If the creditor knows when the debtor gets paid, they can time serving the garnishment papers right after that. That way, they're more likely to catch more money in the account.
For individual debtors, their wages can't be garnished directly, but once the wages are in the bank, they can be taken. So, knowing when the debtor gets paid can significantly help the creditor collect the money owed.
Serving the Writ:
After the bank or third party is served with the garnishment papers, the judgment creditor must send a copy of those papers to the debtor. This is done as soon as possible after serving the bank. It's important to note that the debtor isn't involved in the original lawsuit, so they should only be served after the bank.
When serving the debtor, the judgment creditor must follow certain rules. They need to send the papers using certified mail, with a return receipt requested, and regular U.S. mail. The papers they send should include copies of the garnishment papers, any other related documents, and any court orders.
The copy of the garnishment papers sent to the debtor must also include a notice, written in a clear and noticeable way, informing them of its contents:
"To _________________ , Defendant:
"You are hereby notified that certain properties alleged to be owned by you have been garnished.
If you claim any rights in such property, you are advised:
"YOU HAVE A RIGHT TO REGAIN POSSESSION OF THE PROPERTY BY FILING A
REPLEVY BOND. YOU HAVE A RIGHT TO SEEK TO REGAIN POSSESSION OF THE
PROPERTY BY FILING WITH THE COURT A MOTION TO DISSOLVE THIS WRIT."
Failure to include this notice will result in a void garnishment.
After Service:
The garnishee (e.g., bank) responds, in one of the following ways:
The garnishee is indebted to the debtor
The garnishee is not indebted to the debtor
Garnishee fails to file an answer
If the financial institution or third party says they owe money to the debtor, even if it's just a little, the court will issue a judgement. They'll decide on the amount in the account at the time the financial institution was served. If the debtor keeps putting money in, they'll also consider that.
If the financial institution or third party says they don't owe anything to the debtor, usually because there's no money in the account, the creditor has two options. They can either file a nonsuit (effectively dismissing the action), or they can argue against the bank's claim by giving a sworn statement (an affidavit) saying the bank is mistaken.
If the financial institution or third party doesn't respond, the creditor can ask the court for a default judgment. If the garnishee isn't a financial institution, the creditor can obtain a default judgement against the garnishee for the full amount owed, plus costs and interest. TRCP 667. For garnishes that are financial institutions, the creditor needs to show how they were harmed by the garnishee, not responding. Finance Code 276.002. In both cases, the creditor might get their legal fees covered if they win by default against the financial institution.
**Note: If the garnishee responds to the garnishment by saying they owe money to the debtor, they might get their attorney's fees paid from the debtor's money before it goes to the creditor. But if the garnishee says they don't owe the debtor anything and the creditor can't prove otherwise, the creditor might have to cover the garnishee's legal fees. To avoid this, the creditor's lawyer should talk to the garnishee's lawyer before the garnishee responds. If it looks like the account is empty, the creditor's lawyer can drop the case before the garnishee answers, so they won't have to pay the garnishee's legal fees.
Avoiding Mistakes:
An accurate and thorough assessment of the debtor's assets is essential to prevent erroneous garnishment. If the creditor falsely claims in their affidavit that the debtor does not have in its possession in Texas sufficient property to pay the judgment, they can be held legally responsible. The creditor needs to do a proper check to see if the debtor owns enough property to cover the debt.
Consider Legal Help:
If you are considering garnishment to satisfy your judgment, give the creditors’ rights attorneys at Allen Bryson Lamar, PLLC a call.
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