Posted on January 24, 2012 by Jonathan Alper

Florida Head Of Household Fortunate To Avoid Garnishment Of Wages From Washington Employer

 A man called me seeking help with a wage garnishment instituted by a former business partner who had obtained a Florida money judgment related to their prior business relationship. The man lived and worked in Florida. He supported his non-working spouse and minor children. He was employed by a company based in Washington state. The company had an office in Florida. The employer issued paychecks from the Washington office.  

The creditor domesticated the judgment in Washington, and he obtained a writ of wage garnishment which he served on the employer’s home office in Washington. The employer initially garnished the debtor’s pay check, but the debtor was able to convince a Washington state judge to dissolve the garnishment writ  because the debtor’s wages were exempt under Florida law.  
 
The creditor persevered and served a series of additional wage garnishments upon the employer, and in each instance the debtor got the employer to ignore the garnishment or a court to dissolve the writ. . The debtor asked me what he could do to stop what he believed was collection by harassment. 
 

 There are several legal decisions in various states which hold that debtors cannot export Florida exemptions to foreign states. I do not know if there is a consistent ruling in the state of Washington, but if Washington state law is consistent with other states then the local court should not be required to  recognize Florida’s head of household exemption. If the employer paid the debtor from its Florida branch office the debtor probably could assert the head of household exemption in a Florida court. 

 As a practical matter, if the Washington judge has dissolved more than one attempted wage garnishment based upon the Florida statute exemption, and the creditor continues to serve garnishment writs upon the employer in Washington, the debtor should consider filing a separate lawsuit for wrongful garnishment in Washington. 
 
This debtor may be fortunate that both his creditor and a foreign state judge does not understand that Florida’s exemptions are not enforceable outside of Florida. In general, a Florida debtor does not necessarily lose Florida residency when he takes a job in another state, but he may expose his wages to garnishment were he works. 
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Posted on August 7, 2011 by Jonathan Alper

Court Finds Self-Employed Debtor Cannot Exempt Wages As Head Of Houshold

Creditors cannot garnish wages paid to a person who is head of household. I have written previously about state court decisions which denied this exemption to debtors who were paid from a small business the debtor owned and controlled. State courts have made if it difficult for business owners to pay themselves exempt wages. Now, a Florida bankruptcy court has issued a decision on this topic, finding once more that a business owner could not exempt wages he received from his own business.

Theoretically, self-employed debtors are not prohibited from exempting that part of compensation denominated as wages, salary, or commissions. The problem arises when the business owners pattern and practices make their compensation look more like business profits rather than a steady wage. A business pays its employees in most cases a consistent periodic wage. Payments look more like profit distributions when the payments  vary with the profit and cash flow of the business. Profit distributions to a head of household are not exempt. Increasing the debtor’s salary at the expense of profit distributions shortly before a judgment is entered also makes suspect the wage characterization.

 

In this latest court decision on the issue the bankruptcy court denied the wage exemption of money the debtor received from his own business considering the absence of a written employment agreement, the irregularity of the timeing and amount of “salary” payments, and the fact that salary resumed and increased in the months just before the bankruptcy. This bankruptcy case illustrates, as did the prior state court cases, that the self-employed debtor’s eligibility for head of household wage exemption depends on the facts of each case and particularly on whether the debtor’s compensation is similar to compensation payable to non-owner employees in the same business.  In re McDermott, Case No. 6:09-10942

 
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Posted on June 7, 2011 by Jonathan Alper

Head Of Household Wage Exemption Liberalized By Court Decision

It is easier for debtor’s to assert  head of household exemption from wage garnishment after a ruling by a Florida court. I read about this decision on the Florida Collection Law Blog edited by Jorge Abril. Mr. Abril’s blog post explains that under Florida statutes once a debtor asserts that his wages are exempt from garnishment because he is head of household a creditor has only two days to file with the court an affidavit denying the exemption. In the past, the creditor’s attorney would sign the affidavit on behalf of his client.

The appellate court said that the creditor attorney may not submit the denial affidavit on behalf of the creditor. The affidavit must be signed by the creditor. Mr. Abil writes that, “As a practical matter, given the strict time constraints for filing the sworn denial - 2 days - the requirements imposed by this case will make it difficult for the attorney who represents a hard to reach client to defeat a claim of head of household exemption [regardless of the claim's merit.”

From the debtor’s prospective a debtor may be able to defeat a wage garnishment simply by submitting an affidavit of head of household. Another practical matter: the debtor’s attorney should not advise his client to submit a head of household affidavit the attorney knows, or has reason to suspect, is not true. The debtor attorney should do nothing more than inform his client of the laws and the applicable procedures.
 

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Posted on April 11, 2010 by Jonathan Alper

Is Florida Head Of Household Protected Against Wage Garnishment Served Upon Georgia Employer?

I received an interesting email question about wage garnishment issued outside of Florida against a Florida resident. The questioner resides in Florida and works for a Georgia company at its Florida office. The questioner has a civil judgment entered against him in Florida. The questioner’s pay check is issued by the employer’s payroll office located in Georgia. He is married and is head of household under Florida law. He asks whether his wages would be garnished if the creditor domesticates the judgment in Georgia and serves a writ of garnishment against his employer at the Georgia headquarters.

This debtor is entitled to Florida’s exemption against wage garnishment as long as he permanently resides in Florida. If the employer has a Florida office, which question implies it does, then the creditor will cause the Florida court which issued the judgment to serve the employer at its Florida office. A Florida court should dissolve the garnishment. If the employer did not have a Florida office then the creditor might transfer the judgment to Georgia and serve the writ in Georgia. The debtor could assert his Florida exemption in a Georgia court.

The debtor’s wage garnishment protection is determined by his residence and not where the creditor serves the writ of garnishment on the employer.

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Posted on February 15, 2010 by Jonathan Alper

Wage Garnishment Exemption Asserted By Both Spouses: Can There Be Two Heads Of Household In One Family?

A husband and his wife are jointly liable on a real estate bank loan and could not afford to continue payments. After they stopped making monthly payments the bank  sued both spouses to collect the full loan balance. Both spouses worked and were concerned that the bank would garnish their wages after getting a judgment.

In Florida, a judgment creditor cannot garnish wages of a debtor who is head of household. In a traditional family setting only one spouse can be head of household where there are minor children. The general rule is that the higher earning spouse provides the majority of support for the children and is head of household, and the lesser earning spouse is vulnerable to wage garnishment. In this particular case, both spouses thought they were head of household in their family.

The facts in this case were unusual. Theirs was a second marriage. Each spouse had children from a prior marriage. Because they worked at jobs in different Florida  cities each spouse lived in their own house  with one or more of their own children. Each spouse supported their respective children in their homes. Each spouse owned their own home individually. Each spouse contended that they should be head of household and exempt from wage garnishment. Can there be two heads of household, exempt from wage garnishment, in the same family?

I think that each spouse should be able to exempt their own wages from garnishment in this situation. Florida law is that to be exempt from wage garnishment the debtor must be the primary source of financial support for someone to whom he has a legal or moral obligation. The exemption statute does not limit the qualifying heads of household in one family. Florida courts have held that two spouses living in separately owned and occupied homes each can claim their own home as their exempt homestead provided that each spouse actually uses in their own home as their primary residence. Similarly, I think two spouses can be head of household if they each serve as the primary source of financial support for a different qualifying dependent.
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