Georgia garnishment law may get overhaul, more protection for debtors

Four months after a federal judge declared Georgia's garnishment law unconstitutional, stopping garnishments in part of the state, legislators have pre-filed a proposal that they hope will end the legal limbo and fix the problems in the existing legislation.

“We don’t have a good law right now,” said Wendell Willard, R-Sandy Springs and chairman of the House Judiciary Committee. “I would hope once we pass this law, the question hanging over all the courts about what they can and cannot do will be removed.”

The state’s existing garnishment law is flawed because it doesn’t require creditors to tell debtors that some money — like Social Security benefits, welfare payments and workers’ compensation — is off limits to garnishments. When that money is wrongly taken, the law doesn’t require creditors to tell people how to get it back, and it doesn’t provide a timely procedure for determining whether funds should have been exempt, U.S. District Court Senior Judge Marvin H. Shoob wrote in an order last September.

His ruling stopped all garnishments in Gwinnett County, which processed 31 percent of all garnishments in the state in 2014, the last year for which data is available. Other counties stopped processing garnishments to avoid running afoul of the ruling.

After the Georgia Attorney General and Gwinnett's clerk of courts appealed to Shoob to allow recurring wage garnishments and garnishments for child support from paychecks, he loosened the restrictions in October. But Gwinnett still cannot process garnishments that would take individuals' assets held in financial institutions, like banks.

The proposed new law wouldn’t change any of the exemptions, but seeks to clarify what money in accounts is exempt and how quickly it can be recovered if it is taken improperly. It includes a form that must be sent with a notice of garnishment that explains what funds are exempt from being garnished. It also describes what a debtor should do if exempt money has been taken and explains the redress debtors have.

The proposed law requires a hearing to be held within 10 days of the court receiving a claim of improper garnishment. If the money should be returned, it must be deposited back within 48 hours of the ruling.

“You might call it a consumer protection and a pro-business bill at the same time,” said Jesse Stone, R-Waynesboro, who pre-filed the bill in the senate.

Erik Heath, an attorney who worked on the case that led to the existing law being called unconstitutional, said it was "a pretty solid bill." The previous law, he said, kept debtors in the dark about their rights.

“It’s a dramatic improvement over what we had,” he said. “Any time you inform people about their rights, they will be more likely to exercise them.”

The legislation was the result of nearly three months of discussions and included a complete rewrite of the code, Willard said. It seeks to address the constitutional questions, but does not include all the provisions some consumer advocates had hoped for.

Heath said there are some improvements that he wishes would still be made. Garnishments can be filed anywhere where there is a registered agent and are not required to be filed where the person being garnished lives. More are filed in Gwinnett than in any other county in the state, in part because of the efficiency of its system. But that could require lengthy travel for someone who has to attend a garnishment hearing that is not near home. David Addleton, a consumer attorney in Macon, said he was concerned that the new law didn't require notice of garnishment be sent to everyone on an account if it is shared.

“There is no provision for anyone to determine who owns what,” he said. “They need to make banks liable for giving away property that doesn’t belong to the judgment debtor.”

Willard said in drafting the legislation, he wanted to address the issues raised in Shoob’s order, but didn’t want to make other change’s to the state’s garnishment policy. He said changes to the proposal through the legislative process are possible, but that he hoped to have the legislation approved and signed into law early in the session, so those counties that are not processing garnishments could again do so.

“Judge Shoob hit it right,” he said. “The law we had in Georgia was piecemeal for a number of years. …We’ve addressed that.”