Georgia’s General Assembly enacted a new Garnishment Code in 2016.[1] Effective May 12, 2016, the new Code leaves in place certain powerful creditor remedies, discussed below. By the 2016 statute, the legislature also specified that a debtor may assert exemptions from garnishment. Moreover, the statute now requires that creditors provide judgment debtors with more notice, including specific documents, not required previously.
The 2016 Code commands that the garnishing creditor send to the judgment debtor copies of the garnishment affidavit, the summons, the Notice to Defendant of Right Against Garnishment of Money, Including Wages, and Other Property, and the Defendant’s Claim Form.[2] Copies of these documents must be sent to the judgment debtor by both regular mail and by registered or certified mail or statutory overnight delivery, return receipt requested.[3]
Under Georgia’s new law, the debtor is given more opportunity to contest the garnishment, and to claim that exempt funds captured in the garnishment should be immediately released. Some of the common exemptions a debtor may claim are benefits from Social Security, Supplemental Security Income, unemployment compensation, workers compensation, Veterans Administration payments, certain state pension benefits, retirement funds and disability income.[4] If a debtor files a claim asserting an exemption or other basis, the court is required to convene a quick hearing, within 10 days of receipt of the debtor’s claim.[5] At that hearing, the court will rule on the claim and release any exempt funds from the garnishment.
The new law extends the time for a garnishing creditor to contest a garnishee’s answer, by filing a traverse, from 15 days to 20 days.[6] A creditor may file a garnishment action against any entity or person who holds property or money belonging to the judgment debtor, or who owes a debt to the debtor.[7] This entity or person is called a garnishee, and may include a debtor’s employer, a debtor’s bank, or a debtor’s own company, corporation, limited partnership or limited liability company. When a garnishing creditor disagrees with and wishes to contest a garnishee’s answer–which might assert that the garnishee holds nothing belonging to the debtor–a creditor must traverse the answer within 20 days.[8]
Additionally, the new Code shortens the time for a bank or other financial institution to file an answer, to not later than 15 days after service of the summons (from the previous 30 days).[9] All other garnishees should answer not sooner than 30 days and not later than 45 days after service. With its answer, the garnishee must pay into court all funds that are subject to garnishment (i.e. owing to the debtor). If any third party has a claim to these funds that is superior to the garnishing creditor’s, the third-party claimant is entitled to file this claim in writing and under oath in the case.[10]
The new law also appears to eliminate a creditor’s right to file a pre-judgment garnishment. Therefore, as a general rule, now all creditors who file garnishments should have a judgment against the debtor.
One important creditor right under Georgia law that is not diminished by the new statute is the broad jurisdiction of the garnishment court. Historically, under Georgia law, creditors are entitled to file garnishment actions against any garnishee with an office, residence or other presence in Georgia. Generally, a creditor may garnish in Georgia no matter where the judgment debtor is located or resides, so long as the creditor holds a judgment that is filed in Georgia and the garnishee is present in Georgia.[11]
For example, assume a judgment debtor is an individual person who lives in the State of Hawaii and works at IBM. Since IBM has an office in Georgia, a creditor may file a garnishment in Georgia, so long as the creditor’s judgment is filed in Georgia. It doesn’t matter that the defendant himself resides and works in Honolulu–the creditor may garnish in Georgia and attach the debtor’s IBM wages earned in Hawaii.[12]
Similarly, if the judgment debtor lives in England but has a bank account at Bank of America, a creditor may garnish Bank of America in Georgia. This is so because Bank of America operates in Georgia. All the creditor has to do is to make sure its judgment is filed or domesticated in Georgia, and, if so, the garnishment in Georgia would seize the London resident’s funds on deposit at Bank of America.[13]
As another example, assume that the judgment debtor is a California resident who owns a restaurant in San Diego. The creditor has a Georgia judgment. Assume also that the debtor suffers a fire loss at the restaurant, and makes a claim for the loss to his insurance company, Nationwide Mutual. Since Nationwide has an office in Georgia, a creditor may garnish Nationwide in a Georgia court and seize the insurance proceeds owed by Nationwide to its insured (the judgment debtor in California).[14]
In summary, the new Georgia garnishment statute provides additional protections for a judgment debtor. Assuming they comply with the statute, judgment creditors possess strong rights to garnish in the courts of Georgia, which have broad jurisdiction over a debtor’s property. Creditors are well-advised to take advantage of their powerful garnishment rights under Georgia law, which continue in effect under the 2016 Georgia Garnishment Code.
FOOTNOTES:
[1]. O.C.G.A. §§ 18-4-1, et. seq.
[2]. O.C.G.A. § 18-4-8(b)(1).
[3]. O.C.G.A. § 18-4-8(b)(1)(A)(i).
[4]. O.C.G.A. §§ 18-4-6, 18-4-15(a), 18-4-82 (form for Notice to Defendant of Right Against Garnishment of Property, Including Wages, and Other Property).
[5]. O.C.G.A. § 18-4-15(d).
[6]. O.C.G.A. § 18-4-16.
[7]. O.C.G.A. § 18-4-4.
[8]. O.C.G.A. § 18-4-16.
[9]. O.C.G.A. § 18-4-10(c).
[10]. O.C.G.A. § 18-4-17.
[11]. Souza v. Souza, 196 Ga. App. 59, 60 (1990) (“[I]t is not significant that [debtor] Wayne Souza’s military paycheck may issue from outside the state [of Georgia] as long as his employer/garnishee is within the jurisdiction of the court.”); United Merchants & Manufacturers, Inc. v. Citizens & So. Nat. Bank, 166 Ga. App. 468, 469 (1983) (“Power over the person of the garnishee confers jurisdiction on the courts of the State where the writ [of garnishment] issues.”)
[12]. Id.
[13]. “ [W]e know of nothing to justify the assumption that a debtor can avoid paying his obligations by removing his property to a State in which his creditor cannot obtain personal jurisdiction over him. The Full Faith and Credit Clause, after all, makes the valid in personam judgment of one State enforceable in all other States.” Shaffer v. Heitner, 433 U.S. 186, 210, 97 S.Ct. 2569, 2583 (1976). “Once it has been determined by a court of competent jurisdiction that the defendant is a debtor of the plaintiff, there would seem to be no unfairness in allowing an action to realize on that debt in a State where the defendant has property, whether or not that State would have jurisdiction to determine the existence of the debt as an original matter.” Shaffer, id., at fn. 36.
[14]. “‘A garnishment can be lawfully served upon a foreign corporation by personal service on any agent of the company in this state. ... [I]t is immaterial that the principal debtor and garnishee are both nonresidents, and that the debt garnished was contracted and is payable elsewhere, and in a state by the laws of which it would be exempt from garnishment. Harris v. Balk, 198 U.S. 215.’” Southern Ry. Co. v. Coleman, 80 Ga. App. 227, 229 (1949).
