What is garnishment?
A creditor may take a borrower to court for unpaid debt. When they do, they can seek “garnishment,” which empowers the creditor to obtain one of the following:
- A portion of the borrower’s wages from an employer
- Assets from the borrower’s bank account
The creditor can then recoup the debt until it’s paid off. However, before the court grants a creditor garnishment, they often require a garnishment bond.
According to the Consumer Credit Protection Act, creditors may not take more than 25% of a debtor’s disposable earnings for the week.
In some states, social security, child support, disability, hospital care, burial plot plans, alimony, and other types of benefits and wages are exempt from garnishment. State exemptions such as these help protect borrowers from ending up with no means of support.
Garnishment vs. Attachment
- Garnishment is a legal process that allows a creditor to deduct a percentage of a borrower’s paycheck or assets from their bank account continually until the debt is settled.
- Attachment is a court order that allows a public official to seize a debtor’s assets or property.
Get Your Garnishment Bond:
- Before the courts grant a creditor garnishment, they often require a garnishment bond.
- A garnishment bond protects the borrower (defendant) if their creditor (plaintiff) loses the lawsuit.
- A garnishment bond is a three-party agreement between a creditor, a debtor, and a surety company.
- It’s imperative to get your bond as quickly as possible so the trial may proceed.
What is a garnishment bond?
The courts typically require creditors to obtain a garnishment bond before being granted a garnishment. A garnishment bond protects the borrower (defendant) if their creditor (plaintiff) loses the lawsuit. It guarantees that a creditor will release the borrower’s assets or property they’ve garnished unjustly. If they refuse, the borrower may file a claim against the bond for compensation.
Here’s an example…
Let’s say Bob Smith’s creditor files a lawsuit against him, claiming he hasn’t paid his debts on time. His income is garnished, so a portion of his wages start going directly to his creditor to chip away at his debt.
Bob claims his creditor was dishonest and made an unfair claim against him, so he files a claim on the creditor’s garnishment bond. After investigation, the surety determines that the claim was valid. The creditor was in the right, and a percentage of Bob’s wages continue going to the creditor until his debt is paid off.
How does a garnishment bond work?
A garnishment bond is a three-party agreement between a creditor, a debtor, and a surety company.
- The creditor (plaintiff in a civil case) is the principal in the agreement – the party that must obtain the bond and follow its terms to garnish a debtor.
- The debtor (defendant in a civil case) is the obligee and the potential beneficiary of the bond. They may file a claim against their creditor’s bond if the creditor causes damages due to the garnishment.
- A surety is the financial company that issues and backs the bond. They will settle valid claims upfront for the principal. Then the principal will owe the surety for the amount covered to settle the claim plus interest and fees.
Frequently Asked Questions
If you need a garnishment bond, a judge will let you know. It’s imperative to get your bond as quickly as possible so the trial may proceed. If you wait too long, you may not be able to carry out a garnishment.
Your presiding judge will determine the bond amount required. You will then pay a small percentage of that amount as your bond premium. ZipBonds offers these bonds for as little as $100.
Garnishment bonds are considered low risk because the courts typically won’t grant a garnishment before a creditor provides ample evidence of their right to garnish. Claims on garnishment bonds are rare.
Apply for a Garnishment Bond in Your State
To apply for your garnishment bond, you’ll have to complete a bond application. We’ll ask for a copy of your court order or judgement, financial documents, and a credit release form. Once we’ve received and approved your application, you can pay for and print your bond. Start the application online or call us at 888-435-4191. One of our agents can quickly walk you through the process to get you bonded in a zip!
Founders Ryan Swalve and Zach Mefferd formed the vision for ZipBonds.com when they realized how overly complicated it was to help clients place surety. The frustration of being unable to incorporate the technology they’d used in other insurance-focused projects left them thinking “there has to be a better way.”
Fast forward a couple of years, and that better way is the impetus of everything we do at ZipBonds. We constantly look for innovative ways to improve the bonding process for our clients and agents. Our team comprises individuals who understand all angles of surety – for companies, agencies, and individuals. Incorporating everyone’s point of view to improve the process while simultaneously integrating cutting-edge technology is what sets our business apart.