Garnishee

Garnishee Legal Proceedings Asset Retention Property Custody Employer Responsibility
A garnishee is a person, often an employer, who receives notice to retain custody of assets in his control that are owed to or belong to another person, holding the assets until legal proceedings determine who is entitled to the property.
On this page

Definition of Garnishee

A garnishee is an individual or entity, frequently an employer, who is notified by a court or other legal authority to retain custody of assets—typically wages or bank accounts—belonging to another individual. The garnishee holds onto these assets until the conclusion of legal proceedings, at which time the court determines the rightful entitlement. The garnishee is responsible for maintaining the status quo of the retained assets and may have legal obligations and penalties associated with non-compliance.

Examples of a Garnishee

  1. Employer Wage Garnishment: An employer is served a garnishment notice requiring them to withhold a portion of an employee’s wages to pay a creditor.
  2. Bank Garnishment: A bank receives a notice to freeze a customer’s account up to a certain amount until a legal judgment is made regarding a debt owed by the account holder.

Frequently Asked Questions

Q1: What is the role of a garnishee in legal proceedings?

  • A: The garnishee’s role is to hold and safeguard the assets mentioned in the garnishment notice until the resolution of the legal proceedings.

Q2: Can a garnishee refuse to comply with a garnishment notice?

  • A: No, the garnishee must comply with the garnishment notice or face potential legal consequences, including penalties or fines.

Q3: Are there limits to how much of an employee’s wages can be garnished?

  • A: Yes, there are federal and state regulations that limit the amount that can be garnished from wages, often taking into account factors like minimum wage and living expenses.

Q4: Does being a garnishee affect one’s credit rating?

  • A: The garnishee’s credit rating is generally not affected; however, the individual whose assets are being garnished might see an impact on their credit rating due to the underlying debt.

Q5: What happens if the garnishee fails to hold the assets as required?

  • A: Failing to comply with a garnishment notice may subject the garnishee to legal penalties, including fines and potentially being held liable for the debt.

Garnishment: A legal process whereby a creditor can collect what a debtor owes by ordering a third party to hold and settle the debt from assets or earnings of the debtor.

Creditor: An individual or institution to whom money is owed.

Debtor: An individual or organization that owes money to another party.

Online References

  1. Investopedia: Garnishment
  2. Nolo: Garnishment
  3. IRS Guidelines on Wage Garnishment

Suggested Books for Further Studies

  1. “The Complete Guide to Garnishments: Wage Attachments and Related Debt Collection Law” by Amorette Nelson Bryant
  2. “Wage Garnishment: Laws, Rules, and Procedure” by Jody McLeod
  3. “The Law of Garnishments” by Tracy L. Moon Jr.

Fundamentals of Garnishee: Business Law Basics Quiz

### What is the primary responsibility of a garnishee? - [x] To hold and retain assets as instructed by a garnishment notice until legal resolution. - [ ] To immediately distribute assets to the creditor. - [ ] To negotiate the debt with the debtor. - [ ] To nullify the debt. > **Explanation:** The primary responsibility of a garnishee is to hold and retain assets as instructed by a garnishment notice until a legal resolution determines the rightful owner of those assets. ### In most cases, who is typically served as a garnishee? - [ ] Only banks - [x] Employers and banks - [ ] Customers - [ ] Legal practitioners > **Explanation:** Typically, garnishees are employers who are asked to withhold wages or banks asked to freeze accounts until further notice. ### How much of an individual’s wage may employers generally garnish? - [x] Subject to federal and state limitations - [ ] 100% according to creditor demands - [ ] Only up to 25% of earnings - [ ] There is no limit > **Explanation:** Garnishment of wages is subject to federal and state limitations which take into account minimum wage and living standards. ### Is compliance with a garnishment notice mandatory for a garnishee? - [x] Yes - [ ] No - [ ] It depends on the garnishee’s discretion - [ ] Only if the debtor consents > **Explanation:** Compliance with a garnishment notice is mandatory, and failure to comply can lead to legal penalties for the garnishee. ### Which entity typically issues a garnishment notice? - [ ] The debtor - [x] A court or legal authority - [ ] The employer - [ ] The garnishee > **Explanation:** A garnishment notice is typically issued by a court or legal authority as part of debt collection proceedings. ### If a garnishee fails to hold assets as required, what might happen? - [ ] Loss of their banking license - [ ] The debtor's assets are refunded - [x] The garnishee may face legal penalties or fines - [ ] The garnishee may get a credit raise > **Explanation:** Failure to comply with a garnishment notice can subject the garnishee to legal penalties and fines, and they might be held liable for the debt. ### Can a garnishee’s own personal assets be taken to pay the debtor's debts? - [ ] Yes, always - [ ] In certain circumstances - [x] No, the garnishee's own assets are not liable - [ ] If agreed with the debtor > **Explanation:** The garnishee’s duty is only towards holding and retaining the specified assets of the debtor, not their own personal assets. ### What might a garnishee need to manage during the garnishment period? - [ ] Negotiate new employment - [x] Accurate records and compliance with the garnishment instructions - [ ] Liquidate the assets - [ ] Allot bonuses to the employee > **Explanation:** The garnishee must manage accurate records and comply strictly with the garnishment instructions. ### When a bank is garnisheed, what action is typically taken? - [ ] Increase the interest rates on the account - [ ] Close the account - [x] Freeze the specified amount in the account until legally resolved - [ ] Notify the creditors directly > **Explanation:** A bank typically freezes the specified amount in the debtor’s account until the legal resolution of the garnishment. ### Is there any scenario where a garnishee can stop the garnishment themselves? - [ ] Yes, if they pay off the debt - [ ] Yes, if the debtor consents - [ ] Yes, if the garnishee agrees to take on the debt - [x] No, only a court or legal authority can modify or stop the garnishment > **Explanation:** Only a court or relevant legal authority can modify or stop the garnishment, not the garnishee.

Thank you for exploring the concept of the garnishee with us and tackling the comprehensive quiz questions. Continue your journey to mastering business law!

Wednesday, August 7, 2024
Garnishee Order (Third-Party Debt Order)
Garden Apartments

Accounting Terms Lexicon

Discover comprehensive accounting definitions and practical insights. Empowering students and professionals with clear and concise explanations for a better understanding of financial terms.