Legal Definitions - garnish

Garnishment is a legal process that allows a creditor to collect a debt by seizing funds or assets belonging to the debtor, but which are held by a third party. Instead of directly taking assets from the debtor, the creditor obtains a court order directing this third party (known as the garnishee) to turn over the debtor's property to satisfy the debt.

In a garnishment action:

• The creditor is the person or entity owed money.
• The debtor is the person or entity who owes the money.
• The garnishee is the third party who holds the debtor's assets (e.g., a bank, an employer, a tenant, an investment firm).

The process typically involves the creditor obtaining a court judgment against the debtor, then filing a separate legal action to garnish the debtor's assets. The garnishee receives a legal notice and is then legally obligated to comply with the court order, releasing the specified assets to the creditor.

Here are some examples of how garnishment might apply:

• Bank Account Garnishment:

  Imagine a small business, "Creative Designs," owes a printing company, "PrintPro," $8,000 for services rendered. PrintPro sued Creative Designs and won a court judgment for the unpaid amount. PrintPro then discovers that Creative Designs has a checking account at "City Bank." PrintPro (the creditor) can obtain a garnishment order and serve it on City Bank (the garnishee). City Bank would then be legally required to freeze Creative Designs' account and release up to $8,000 to PrintPro to satisfy the judgment. Creative Designs (the debtor) does not directly hand over the money; the bank does.

• Rent Garnishment:

  Suppose a tenant, Mr. Henderson, caused significant damage to his rental property and, after moving out, a court ordered him to pay his former landlord, Ms. Chen, $4,000 for repairs. Mr. Henderson now rents a different apartment from "Premier Property Management." Ms. Chen (the creditor) could seek a garnishment order against Premier Property Management (the garnishee). The court order would direct Premier Property Management to pay Mr. Henderson's monthly rent payments directly to Ms. Chen until the $4,000 debt is fully satisfied, rather than collecting the rent from Mr. Henderson and then Mr. Henderson paying Ms. Chen.

• Investment Account Garnishment:

  Consider a situation where an individual, Dr. Evans, defaulted on a substantial personal loan from "Capital Lending Group." After obtaining a court judgment, Capital Lending Group (the creditor) learns that Dr. Evans (the debtor) has a brokerage account holding stocks and bonds with "Global Wealth Advisors." Capital Lending Group can obtain a garnishment order against Global Wealth Advisors (the garnishee). The order would compel Global Wealth Advisors to sell a portion of Dr. Evans' investments and transfer the resulting funds to Capital Lending Group until the loan debt is paid off.