What to do about a Late Filed Garnishment Response: An Employer Remains Liable for Monies Paid

I file wage garnishments all the time on my Tennessee judgments.

If you know where a defendant works, Tennessee law allows a judgment creditor to garnish the debtor’s wages for payment toward the judgment. (See Tenn. Code Ann. § 29-7-101). Without boring you with the details (see this earlier post instead), an employer then is required to pay about 25% of the employee’s wages to the Court Clerk, who then holds the wages and disburses them to the creditor.

In the event the employer fails to respond to the garnishment, the creditor can seek a judgment against the employer itself for the full amount of the judgment (not just 25% of it), which, clearly, is an awesome way to actually get your money.

I’ve explained this process before: you get a “Conditional Judgment” against the employer and then you issue a Scire Facias, which requires the employer to come to Court and “show cause” why it shouldn’t be a “final” judgment.

This sounds great, but nine times out of ten, the employer shows up in response and files (finally) an answer. Under Tennessee case law, a late filed response is good enough to stop the process and avoid a “final” judgment being entered. Last week, the Tennessee Court of Appeals issued a great opinion in Emrick v Moseley (July 30, 2014), reviewing this entire process.

So, if a conditional judgment is considered a “wake up call” to prompt a response from an employer, then what do you do about the money that the employer should have paid to the Clerk? Two weeks ago, I had this exact case and argued that, under the existing case law, the cow was out of the barn and the employer’s only obligation is to comply with future obligations (i.e. withhold future wages).

I was wrong. That’s where the Emrick case is so good. Via dicta, the Emrick Court says that the employer has exposure under Tenn. Code Ann. § 29-7-112 for any money that it should have paid in, if it had timely responded.

So, no, you can’t get a judgment for the full amount of the debtor’s judgment, but you can get a judgment for the garnishment amounts that should have been withheld.

This is good news for creditor attorneys, and, even though I was wrong on this issue in the past, I’m glad to have been wrong.

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Employers Who Provide False Garnishment Answers May End Up Owing the Money Themselves

I got a judgment a few months ago, and, having found out where the judgment debtor works, I issued a wage garnishment against the debtor’s wages.

And, oh man, did I ever have that guy. Not only did he work there, but he was listed (and pictured) on their website as an executive. It was only a matter of days until I got my money, right?

Well, not exactly. The employer filed a response that said “Terminated.” That was a surprise. I checked the website. The guy was gone.   Did my garnishment get him fired?  Strange.

So, out of curiosity, I called the employer and got the company directory. The debtor was still listed. So, I waited a few weeks, and they were still listed. I tried the extension and, within seconds, I had the debtor on the phone.

Long story short, I think this employer is lying. What do you do?

Tenn. Code Ann. § 26-2-204 requires garnishment responses to be under oath. The law even anticipates that an employer might lie: “The answer of the garnishee is not conclusive.” Tenn. Code Ann. § 26-2-205. To that end, Tenn. Code Ann. § 26-2-206 allows a creditor to get a judgment against the employer if they actually have assets of the debtor in their possession.

So, in the end, a creditor has rights against a dishonest employer, but there are hoops to jump through. Though the statutes don’t lay this out, the procedure would be to subpoena the payroll records or otherwise get testimony from the employer to establish the veracity of the response. Then, the creditor must take the employer back to Court under § 26-2-206 to get a judgment.

It’s a hassle. But, if you lie, employers, I’m happy to take a judgment against you.

New Tennessee Legislation Imposes Contempt Sanctions on Judgment Debtors Who Don’t Notify Creditors of New Employment

As a creditor rights attorney, I’m always looking for new developments in the law that gives me any advantage.

Recently, I saw that the Tennessee Legislature is considering a new law that gives creditors an unfair advantage.

I’m talking about Public Chapter 187, on wage garnishments, which would create the new Tenn. Code Ann. § 26-2-225. The statute provides, in part, that:

… A judgment debtor whose salaries, wages or other compensation are subject to a garnishment shall notify the judgment creditor who filed the writ of garnishment within ten (10) days, as computed in § 1-3-102, of obtaining any new employment. Notice to the judgment creditor shall be by certified mail and shall include the name, address and telephone number of the new employer. A judgment debtor who fails to provide notice of new employment in compliance with this section is in contempt of court and, upon the court making a determination of contempt, may be punished the same as contempt of court in a judicial proceeding. …

Under this proposed law, any debtor whose wages are being garnished must notify the creditor within 10 days, via certified mail, of any new employment.

As a creditor’s lawyer, sure, I understand why this law would be helpful: when a debtor switches jobs it can take months for me to figure out where they work. But, I’m surprised that  the Legislature would waste this energy to get involved in this collections cat-and-mouse game.

Frankly, even noting my creditor-friendly bias, I think this law goes a little far. An affirmative requirement that  the debtor send written notice, via certified mail, seems so onerous that I predict that a General Sessions Court would hesitate to impose h a contempt charge.

This is just a strange law, all around.