Unlawful Garnishment

I have a new topic today! A tax client has approached me with a dilemma. Last August he was in negotiations with a credit card company under a hardship because of a divorce. The guy owes 10K. The credit card company gives him a phone number to call, it's a legal firm that does their collections. They put him under a payment plan. HE offers to settle the debt while in negotiations for around 8K, they REFUSE (what a bunch of idiots, I would have taken the money and closed the account); meanwhile, while he's making payments to the collection/attorney office, his brother gets served with papers for my tax client to appear in court for this account. HE doesn't get served, his brother doesn't know what to do with the papers, he's not even at the same house, so the client never gets the papers, never shows up in court, gets a default judgment in the amount of $25K!!!!!. Then, in February, they start garnishments to the tune of $2500 per month; I didn't get the paperwork until last month, so I helped him file with the court an objection to the calculation of exempt wages. My argument is this, he has a court order ordering child support, health, dental, vision insurance that should have been included in the calculation. The third party payroll service is refusing to acknowledge the court order because it is not a GARNISHMENT ORDER FROM CHILD FAMILY SERVICES. I say it is still a court order (a lawful order) and it should be included in the calculation for determining the total amount of exempt wages that can be subject to the 25% garnishment rule. I also think the whole judgment should be vacated because he was not properly served and did not have his day in court. Another thing, the judge answered the objection with "garnishment objection was not answered within the five day period (in February), so the objection was denied in part, he said we could go ahead and file the objection again on August 8 (is there something about the six month period if it's a continuing garnishment?); I am filing a motion with the client on August 8 to have the judgment vacated, could I do that right now? This garnishment is going to cause this person to go into foreclosure on his home this month, and I think it's a bunch of bs, he should have been allowed a hearing based on his objection even if it was late, it's still an emergency. All comments welcome, we are in Colorado

Grace would you please address this issue? Thank you

WOW........ what a horrible thing to have happen to this guy!!!

This guy MUST get an attorney and go to the base of the problem---the fact that he was denied the opportunity to appear on his own behalf. That has to be addressed fully...........I do understand that addressing that takes time and in the mean while, I think you are right on the money (pun intended) by expecting the court to recognize the court order, even if it isn't a 'GARNISHMENT ORDER FROM CHILD FAMILY SERVICE'.

Also of concern to me is the fact that while he was unable to keep to the terms of the original credit card agreement, he DID make other payment arrangements to keep the matter out of court according to what you have said---but they went ahead and took him to court while he was in keeping with the subsequent agreement. This is not appropriate, since the subsequent agreement supercedes the first. It is my feeling he has a strong leg to stand on in court regarding the actions of this creditor.
In sad situations like this, the "big guys" get away with what they can and it is a downward spiral until an attorney gets involved and stops this flow of errors that are happening one upon the other. Your client is fortunate to have you in their corner.

Here's the real rub, he had an attorney in January who could have prevented all this from happening, and he didn't. I examined the attorney file and not one thing was done, even though the guy gave him a $5000 retainer. This is a pretty pitiful situation, which is why a layman like me is helping out. The good news is the judge is listening, and giving him every opportunity to help himself. He's out of money because of the garnishments, he can't afford an attorney now. So I'm helping as I can. Thank you Grace for responding.

A payment plan after default wouldn't amount to a contract prohibiting a lawsuit unless the plan was agreed upon for that purpose specifically. If the payment plan was agreed upon simply because money was owed, then the lawsuit was probably proper.

Process is properly served if left with an adult family member at the defendant's house. So, depending on the specifics of the situation, your client may have been properly served. If he was not properly served, then your client can certainly move the court to have the judgment set aside.

Only disposable earnings may be garnished. Disposable earnings are basically all earnings that are not legally required to be withheld by one's employer. If child support/insurance is not withheld by your client's employer, and instead is paid by him after receiving his paycheck, then those costs cannot be subtracted from his disposable earnings. If his wages are garnished to pay the child support/insurance, then those costs should be subtracted from your client's disposable earnings.

The garnishment has to be renewed every 180 days (6 months), so your client can object again at each renewal. However, if your client can show the court good cause, he can dispute the exemptions at any time.

I would file the motion immediately if I were your client.

Also, be careful about how much legal work you're doing for your client. You could find yourself being accused of the unauthorized practice of law, and it's possible that you could even be liable for advising your client incorrectly.

Hope all that helps!

Disposable earnings are basically all earnings that are not legally required to be withheld by one's employer.

Thank you John Smith for answering, I cannot find anywhere where it says not legally required to be withheld by "one's employer". That's where I am having the problem. I have looked at the entire statute from beginning to end regarding garnishment and cannot find any reference to employers. If this is the case, why would someone who's volunteering to pay child support and getting garnished on a credit card payment even continue to pay child support? Why not let it get behind and have social services garnish him? He'd be ahead right?

Oh, also, I am not doing the legal work, I just prepared the forms for objection to calculation of exempt wages because I was preparing the payroll totals to submit, but since he is representing himself I am assisting in preparing those forms and also will help in his motion to vacate the judgment due to improper process service. A person who respresents themselves in court has the right to have assistance, isn't that correct?

It's not explicitly in the statute, but it's how the courts interpret the statute. Check out a 1996 Colorado case called Rios v. Mireles:

You'll probably be okay, but be aware that courts have held that the preparation of legal documents to be submitted to a court can be considered "practicing law." It probably depends on what you actually did when you say that you prepared forms.

There's an interesting case where a software company was found to be guilty of the unauthorized practice of law when its software prepared bankruptcy documents for a consumer. From the description, it was akin to something like Turbo Tax except that the documents were intended to be filed in court (that's obviously not the case with the tax documents that Turbo Tax prepares). Check out In re Reynoso, 477 F.3d 1117 (9th Cir. 2007).

But you'll probably be okay. I just wanted to bring it to your attention.