Employers, Banks, and Creditors: Here’s What Happens Immediately After Service of a Garnishment (Per Rule 69.05)

When an employer or company receives a garnishment, they are generally confused as to what to do next. Granted, there is very small print on the backside of the form that purports to provide instructions. Good luck reading, much less understanding, that text.

As a legal matter, Tenn. Rule Civ. P. 69.05 is designed to provide the actual, “legal” instructions to the garnishee. Specifically, Rule 69.05(3) imposes the following timeline for compliance:

Step One: Next Business Day After Service: “…ascertain whether the garnishee holds property of the debtor. If so, the garnishee shall mail one copy of the writ of garnishment with the notice to the last known address of the judgment debtor. Where the garnishee is a financial institution, the balance in the judgment debtor’s accounts on the night of the service date is the amount subject to that garnishment writ.”

Step Two: Within Ten Days of Service: “…file a written answer with the court accounting for any property of the judgment debtor held by the garnishee.”

Step Three: Within Thirty Days of Service: “…file with the court any money or wages (minus statutory exemptions) otherwise payable to the judgment debtor. If the garnishee holds property other than money or wages, a judgment may be entered for that property and a writ of execution may issue against the garnishee.”

Rule 69.05(3) has some fairly dense text (i.e. it says a lot of things in a short amount of space). Here’s a few quick take-aways.

  • First, where you’re dealing with a bank, timing is everything. A creditor will want to time their garnishment to maximize the recovery. Knowing that the amount is determined “on the night of the service date” is useful information.
  • Next, if the creditor is seeking “property other than money or wages,” the rule allows for the entry of a judgment for that property, with a writ of execution to issue. This would be where a garnishee is holding personal property, choses in action, or a judgment. This subsection suggests a very efficient “turn-over” procedure for that type of property.

One issue the creditor will have is that there are other statutes, court precedent, and local rules that deal with these same issues. Per the Advisory Commission Comment, the intent here was to “consolidate procedures…into a single orderly rule.”

So, when in doubt, follow Rule 69.05.

You’ve Got the Escalade, Now What? A Reminder of What Slow Pay Motions Can’t Do

With the economy in shambles, I’ve come to learn that, sometimes, people are broke.

When I ask that they pay me $250 a month on a judgment, they turn around and file a “slow pay” motion asking to pay me $20 a month.  I talked about Slow Pay Motions (a.k.a. Motion to Pay Judgment by Installments) a few years ago.

Let me revisit one aspect I left out in that earlier post:  What exactly does a Slow Pay Motion stop you from doing?

Tenn. Code Ann. § 26-2-216 does not stay garnishments against real or personal property; it only stays garnishments against wages or salaries due to the debtors:

The filing of such motion by the debtor shall stay the issuance, execution or return of any writ of garnishment against wages or salary due the judgment debtor or any other funds belonging to the judgment debtor …

Tennessee cases support this conclusion: “No such installment payments are to be ordered unless the debtor has filed an affidavit stating that no other assets are available for payment of the judgment except the wages or salary of the debtor and that any other funds receivable by the debtor are so limited that installment payments are appropriate.” Harrington v. Harrington, 759 S.W.2d 664, 668 (Tenn. 1988).

So, let’s say you execute against a Cadillac Escalade (congratulations), and the borrower files a Slow Pay. In that case, the Court may enter a Slow Pay Order and set payments. But, that Order will prevent Wage Garnishments;  it will not stop collections on real or personal property.