Legal News for Credit Union Managers Since 1990
« Substantial Abuse – Bankrutpcy Dismissed
Clearance On Check Deposits »
13
Dec
2010

Garnishment Protection Lifted At Deposit

In some states, a debtor’s wages are generally not subject to garnishment. Here, however, debtor’s wages were directly deposited into the debtor’s account at I.B.M. Employees Southwest Federal Credit Union.

A judgment creditor thereafter garnished debtor’s account at the credit union and debtor brought an action to dissolve the garnishment, arguing that the funds in the account were his wages and, therefore, exempt under Texas law from attachment.

Here, the court held that:

The debtor’s automatic deposit of his wages into his credit union account are subject to garnishment by another creditor since the deposit itself changes the character of the protected wages.

The court found that once wages are paid and received by the wage-earner, whether paid directly or deposited into the debtor’s account, they cease to be protected and are subject to garnishment. Gerald Guiberson v. I.B.M. Employees Southwest Federal Credit Union (Texas Court of Appeals, Case No. 92-03011-CV),

EDITOR’S COMMENT

It is important to note that although a debtor’s wages may not be protected from garnishment once they are deposited into a financial institution’s account, other benefits, such as ADC, Veterans or Social Security benefits, have been extended protection against garnishment.

In the case of Jerry Edwards v. Patricia Henry, 97 Mich. App. 173, the plaintiff garnished debtor’s bank account which was, in part, comprised of a deposit of the debtor’s ADC benefits. The garnished account also contained wages from the debtor’s part-time job. Here, the court found that the wages in the account were subject to garnishment, however, the plaintiff was not permitted to attach the ADC benefits in debtor’s account.

The court noted that the federal statutes provide greater protection on government issued benefits.

Depending on the precise government benefit issued, the debtor’s account may be protected from garnishment even after it is deposited in debtor’s account.

For example, the statute protecting Veterans benefits provides shelter “either before or after receipt by the beneficiary.”

Author: Charles R. Harroun, Attorney at Law



This entry was posted on Monday, December 13th, 2010 at 4:32 am and is filed under Employees, National. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Leave a Reply

Your comment

Powered by WP Hashcash

  • Recently Posted Articles written by: Charels R. Harroun, Attorney at Law

    • Statement of Financial Affairs: Discharge Denied
    • Holder in Due Course – Checks
    • Reasonable Reliance on Debtor’s Loan Application
    • $100,000.00 Award to Employee
    • Chapter 13 Bankruptcy Home Equity Mortgage Modifications
    • Substantial Abuse: Bankruptcy Dismissed
    • Sale of Credit Union Collateral: “AS IS”
    • Mobile Home Lien Superior to Real Estate Mortgage
    • Deposit Set-Off Not Allowed
    • Credit Union Board-Member Suit Dismissed
    • Collateral: Embezzled Funds

  • Website Builder

2009-2020 Copyright Harroun, P.C. | Credit Union Legal Newsletter powered by WordPress and Uchilla
Subscribe: Entries (RSS) and Comments (RSS)