Bankruptcy FAQ

What Does Garnishment Mean?

Garnishment, or as it’s called in many New England states, trustee process, is a creditor’s remedy aimed not directly at the debtor but rather at a third party, called the garnishee, who owes a debt to the principal debtor or has property in which the principal debtor has an interest. Prejudgment garnishment serves as a warning or notice to the garnishee that the creditor claims to have the right to have that debt or property applied in satisfaction of the creditor’s claim, and that the garnishee should hold the property until the creditor’s suit against the principal debtor is resolved.

The most common garnishees are the principal debtor’s employer and the bank in which the principal debtor has a checking or savings account.

Example: Assume that Mr. Borrower (Mr. B) obtains a loan from We Make Loans (WML) and then fails to make payments on the loan as they become due. WML learns that Mr. B has a savings account with Garnishee State Bank. WML can bring an action against Mr. B to recover the debt. In addition, WML recover the debt by following the garnishment procedures provided by state statutes, garnish Mr. B’s bank account. Then, if WML is successful in its suit against Mr. B and obtains a judgment, the money in Mr. B’s account with Garnishee State Bank can satisfy that judgment.

In some instances, the subject property may have to be sold in order for the cash proceeds to cover the debt. In some instances, after being properly notified, the garnishee no longer holds the principal debtor’s property; the creditor may be able to recover from the garnishee personally.

Garnishment is sometimes referred to as a form of attachment, another creditor’s remedy. The two remedies have many similarities. Actually, in some states garnishment is not an independent remedy at all but is rather a proceeding supplemental to attachment. In other states, however, garnishment is an independent action available in circumstances under which attachment would not be, and subject to different statutory provisions.

Both attachment and garnishment are statutory remedies governed by state rather than federal law, and both are devices to collect debts. Whereas attachment is aimed at property in the principal debtor’s possession, garnishment is aimed at property held by a third party. Attachment is available only before the court renders a judgment in the debt-collection proceedings, but garnishment is available either before or after judgment is rendered. In addition, in an attachment proceeding, the property is seized pending the court’s decision, whereas in a garnishment action the property is left in the care and custody of the garnishee until the court rules on the matter.

An attorney experienced in debtor-creditor or bankruptcy law can advise a creditor on the best methods for collecting its debts, which may include garnishment, and can provide counsel to debtors who are faced with an insurmountable debt load.

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