Garnishments (New Jersey)
Last Reviewed: June 2020
A garnishment is a post-judgment remedy that allows a judgment creditor to seize a judgment debtor’s assets, such as the debtor’s wages, installment payments to a debtor, state income tax refund, and bank accounts. After a judgment is signed by a judge, a judgment creditor must wait 21 days before requesting a garnishment against the judgment debtor.
Garnishments (New Jersey): Summary
Periodic and Non-Periodic Garnishments
There are two types of garnishment: periodic and non-periodic. A periodic writ of garnishment allows a judgment creditor to garnish funds from a source that pays the judgement debtor on a regular basis, such as a judgment debtor’s wages, bonuses, payments from a pension, or even debt that is paid to the judgment debtor on a periodic basis, such as rent payments or land contract payment. Writs for periodic garnishments do not expire; they are effective until the balance of the judgment is paid.
A nonperiodic writ of garnishment is a one-time garnishment used to garnish the funds in a judgment debtor's bank account, or other property. If there is a balance remaining on the judgment after the non-periodic garnishment, another writ of garnishment must be entered before a judgment creditor may collect additional funds.
Income Tax Refund Garnishment
An income tax refund garnishment is used to garnish a judgment debtor’s State income tax refund. Once money has been garnished under the income tax refund writ, the writ is no longer valid. If there is a remaining balance on the judgment, a judgment creditor must get another writ to collect more money towards the balance. There is no authority that allows a judgment creditor to garnish federal or city income tax refunds.
Service of Garnishment, Garnishment Disclosure Form, and Objections
Once the writ of garnishment is signed by a judge, the writ of garnishment must be served on the place with control over the debtor’s funds, called the “garnishee.” Once the garnishee is served with the writ of garnishment, the garnishee must complete a Garnishment Disclosure form to provide information about the debtor’s money that is controlled by the garnishee.
Certain objections apply to a writ of garnishment, such as:
- the debtor’s funds are exempt from garnishment by law,
- the debtor has pending bankruptcy proceedings
- an installment payment order for the debt has been entered
- the judgment has been paid
- the garnishment was not properly issued or is invalid
- the maximum amount permitted by law is already being withheld pursuant to a higher priority garnishment. Another garnishment is higher in priority if it was issued at an earlier date, is an order of income withholding for child support, or is used to satisfy a tax liability owed to the State of New Jersey or other state governmental unit.
Under New Jersey law, a wage garnishment is possible if you earn more than $217.50 per week and your net pay after taxes and mandatory deductions is more than $154.50 per week. If your gross earnings are less than 217.50 and your net take-home pay is $154.50 per week or less, you are exempt from wage garnishment. Otherwise, garnishment is limited to 10 percent of your gross pay before taxes.
The Credit Union as a Garnishee
If the credit union is served with a writ of garnishment as the garnishee, be sure to respond to the garnishment by sending the notice to the Garnishee the same day. The credit union must complete and return this form even if the judgment debtor does not have an account with the credit union, does not have any available funds in any accounts, or, in the employment context, no longer works at the credit union. the credit union fails to respond to the garnishment, the court has the power to order the credit union to pay the full amount of the judgment – even though it is not the credit union’s debt! – to the judgment creditor.
After sending in the Garnishment Disclosure, immediately begin withholding funds, but hold the funds for 28 days to allow the judgment debtor time to object to the garnishment. After 28 days have passed since receiving the garnishment, remit the funds as they are withheld. End the withholding of funds when the identified judgment amount is satisfied or the garnishment is released.
Right to Set Off
If the debtor has a delinquent loan to the credit union, the credit union may apply the funds that would otherwise be paid towards a garnishment order to satisfy the delinquent loan balance. Additionally, the law permits a credit union to refuse a withdrawal from any account on which it has a lien if the member is delinquent on any outstanding obligation to the credit union at the time of the withdrawal.
So, if a debtor is already delinquent on loans owed to the credit union when the credit union is served with a writ of garnishment, the credit union would have a lien on the debtor’s credit union accounts and the credit union could invoke its off-set rights refuse to withdraw the member’s funds to pay the garnishment. Additionally, it is possible that there is language in the membership agreement and loan disclosures between the credit union and its member that could grant the credit union the right to set-off the account funds against the amounted owed to the credit union.
What actions should credit unions take to ensure compliance with garnishments?
Perform an account review for each account in the name of the account holder named on the garnishment to determine if any federal benefit payments are deposited into the account and to determine if the credit union is owed any money and may implement a set off. Finally, be sure to disclose the garnishment the same day as received to the Garnishee. If there is no filing of a claim of exemption of the funds after 20 days, they can be released.