Creditor Rights
Current Topic: May, 2004 --
GARNISHMENT
Writ of garnishment can be a useful tool especially after you gain asset information from the discovery process. A writ of garnishment can reach assets not in the possession of the judgment debtor; to include, bank accounts, safe deposit boxes, commissions, accounts receivable; but not, the wages of an individual debtor.
Only in cases where there is serious concern that the debtor will transfer, encumber, and/or conceal property is the Application for Writ of Garnishment appropriate prior to judgment and then may only be used by a plaintiff who is owed a liquidated debt based on contract.
Typically an Application for Writ of Garnishment is filed ex parte after final judgment. Due to the fact that garnishment is considered to be an extraordinary remedy, strict conformity with statutory requirements is mandatory. Mendoza et al v. Luke Fruia Investments, Inc. et al, 962 S.W.2d 650 (Tex. App. -Corpus Christi, 1998). No hearing, bond, or order is required prior to the issuance of the Writ of Garnishment.
Grounds for a garnishment are outlined in Texas Civil Practice And Remedies Code §63.001:
- an original attachment has been issued;
- a plaintiff sues for a debt and makes an affidavit stating that :
- the debt is just, due, and unpaid;
- within the plaintiff's knowledge, the defendant does not possess property in Texas subject to execution sufficient to satisfy the debt; and
- the garnishment is not sought to injure the defendant or the garnishee; or
- a plaintiff has a valid, subsisting judgment and makes an affidavit stating that, within the plaintiff's knowledge, the defendant does not possess property in Texas subject to execution sufficient to satisfy the judgment.
Service of the Writ of Garnishment will be made immediately by the Sheriff or constable and a return shall be filed with the court clerk. Tex. R. Civ. P. §663 The third-party garnishee is to immediately freeze any and all assets of the defendant. As soon as practicable after service of the Writ of Garnishment has been executed, the defendant is to be served with the Writ of Garnishment as allowed in Tex. R. Civ. P. §21a. Notice to the defendant must include the statutory language notifying him of his rights. See Tex. R. Civ. P. §663a.
The defendant may file a replevy bond, request the court substitute property, or he may contest the garnishment action through a motion to vacate, motion to dissolve, and/or a motion to modify. A replevy bond must be set by the court at an amount equal to the lesser of (i) the value of the garnished property or (ii) the amount of the plaintiff's claim plus one year's interest and estimated court costs. Tex. R. Civ. P. §664. The defendant may also claim joint ownership of said property. Should the defendant claim joint ownership, the court will then have to determine the amount of ownership each party has in the property subject to garnishment.
The garnishee must freeze the assets it has belonging to the defendant and timely file an answer. The answer by the garnishee must be under oath, in writing, and signed by him, and shall make true answers to the several matters inquired of in the writ of garnishment. Tex. R. Civ. P. §665. Failure to file an answer or filing of a defective answer may subject the garnishee to a default judgment for the full amount of such judgment against the defendant together with interest, costs, and the costs of the garnishment proceedings. Tex. R. Civ. P. §667.
Additionally, the garnishee may claim reasonable compensation to be taxed against the defendant. Tex. R. Civ. P. §677.
Sale or transfer of all property subject to the garnishment is done as with any other property subject to execution.
It should be noted that as a general practice banks will incur between $250.00 and $750.00 in attorney fees which will come off the top of any funds garnished. If at all possible, contact with the debtor immediately after the garnishment is served may net your client additional monies if the debtor will agree to release the funds or reach a settlement with your client; as it generally takes a couple days before the bank's attorney will receive the garnishment documents.
Disclaimer: This information is not meant to replace your attorney or to give you specific legal advice but to assist you in better understanding the issues in creditor's rights.