Legal Definitions - garnishment

Garnishment is a legal process where a court orders a third party, who holds money or property belonging to a debtor, to pay that money or property directly to a creditor to satisfy a debt. This typically occurs after a creditor has successfully sued the debtor and obtained a court judgment confirming the debt.

The third party, known as the garnishee, is usually the debtor's employer (for wages) or their bank (for funds in an account). Instead of paying the debtor, the garnishee is legally compelled to send a portion of those funds directly to the creditor until the debt is paid off, or up to legally defined limits.

• Example 1: Wage Garnishment for Unpaid Consumer Debt

  Imagine Maria took out a significant personal loan from a bank. Due to unexpected financial hardship, she fell behind on her payments. The bank sued Maria and obtained a court judgment for the outstanding balance. To collect the debt, the bank then petitioned the court for a garnishment order against Maria's employer. The court granted the order, instructing Maria's employer to withhold a portion of her regular paychecks and send that money directly to the bank until the judgment is satisfied.

  This illustrates garnishment because the court ordered a third party (Maria's employer) to divert funds (Maria's wages) directly to the creditor (the bank) to pay off a judgment debt, rather than paying the debtor (Maria) the full amount.

• Example 2: Bank Account Garnishment for a Business Judgment

  Consider Tech Solutions Inc., a small software development company, that completed a custom application for a client, Innovate Corp. However, Innovate Corp. refused to pay the final invoice, claiming dissatisfaction with the product. Tech Solutions Inc. sued Innovate Corp. for breach of contract and won a judgment for the unpaid amount. After Innovate Corp. still failed to pay, Tech Solutions Inc.'s attorney sought a garnishment order from the court targeting Innovate Corp.'s business bank account. The court issued the order, compelling Innovate Corp.'s bank to freeze and transfer a specific amount from the client's account directly to Tech Solutions Inc. to satisfy the judgment.

  This example demonstrates garnishment as the court commanded a third party (Innovate Corp.'s bank) to seize funds (money in Innovate Corp.'s account) and transfer them directly to the creditor (Tech Solutions Inc.) to fulfill a court-ordered debt, bypassing the debtor (Innovate Corp.).