Alabama Garnishment Law Requirements

Training For Alabama Garnishment Law Requirements

What Is A Garnishment?

At A Glance

Alabama

Maximum percentage: 25%.

Threshold: Federal 30× minimum-wage threshold, subject to Alabama exemptions.

Employer answer deadline: Generally 30 days.

Administrative fee: Yes, for certain withholding types.

Cost recovery: Child-support processing fee may be recovered at $2 per month.

Priority rule: Child support and certain government claims generally take priority.

Form name: Garnishee's Answer (Form C-22); Process of Garnishment (Form C-21).

Alabama Garnishment Law Requirements

Alabama employers that receive a wage garnishment must comply with both Alabama law and applicable federal garnishment requirements. The rules depend on the type of debt involved, and special rules apply to child support, tax levies, and other federally regulated obligations.

Alabama Wage Garnishment Overview

Under Alabama law, wages, salaries, and other compensation for personal services are generally subject to garnishment only to the extent permitted by applicable law. Alabama Code § 6-10-7 provides an exemption for 75% of a resident employee's wages, salaries, or other compensation from garnishment for ordinary debt collection. This means that, for qualifying Alabama residents, up to 25% may generally be subject to a creditor garnishment, subject to federal restrictions and any applicable exceptions.

Alabama also expressly excludes wages and salaries from the state's general personal-property exemption. Wage exemptions are instead governed by provisions such as Alabama Code §§ 5-19-15 and 6-10-7.

Consumer-Credit Garnishments

Alabama has a specific restriction for garnishments arising from a consumer credit transaction Before judgment is entered, a creditor generally may not attach the debtor's unpaid earnings by garnishment.

After judgment, the amount of unpaid earnings subject to garnishment for a consumer credit transaction is limited to the lesser of:

• 25% of the debtor's disposable earnings for the applicable week; or>
• The amount by which the debtor's disposable earnings exceed 30 times the federal minimum hourly wage in effect when the earnings are payable.

For this purpose, Alabama defines disposable earnings as earnings remaining after deductions required by law. Periodic payments from a pension, retirement, or disability program are excluded from disposable earnings under this provision.

Federal law contains comparable limits for ordinary consumer debts, and employers should apply the rule that provides the greater protection to the employee. The federal Consumer Credit Protection Act generally limits ordinary garnishments to the lesser of 25% of disposable earnings or the amount above the applicable 30-times-federal-minimum-wage threshold.

Alabama Garnishment Process and Employer Response

An Alabama garnishment is a legal process directed to the garnishee, which may be an employer when wages are involved. Alabama Code § 6-6-390 generally permits garnishment in connection with a judgment on which execution can issue; prejudgment garnishment is subject to additional requirements and generally requires a showing of extraordinary circumstances.

When garnishment process is served, Alabama Code § 6-6-393 requires the garnishee to appear and file an answer under oath within 30 days. The answer addresses whether the garnishee is indebted to the defendant and whether additional amounts will become payable under an existing contract.

Employers should therefore:

• Review the garnishment immediately upon receipt.
• Verify that the named individual is an employee and determine the applicable payroll and withholding information.
• Determine the employee's disposable earnings and the legally permitted withholding amount.
• Begin withholding according to the order and applicable federal and Alabama limits.
• File the required garnishee answer within the applicable deadline.
• Remit withheld funds as required by the garnishment order and applicable law.
• Continue withholding until the order is released, the debt is satisfied, or another legally effective termination event occurs.
• Maintain records of the order, calculations, amounts withheld, and payments remitted.

Remitting Garnished Wages

Alabama Code § 6-10-7 provides that, after 30 days from the first retention of money from the defendant's wages, the garnishee must begin paying the retained funds into court as they are deducted or withheld and must continue doing so monthly or more frequently until the amount required to be withheld has been collected. The applicable court may subsequently enter an order of condemnation and disburse the funds to the plaintiff.

Because the precise remittance procedure can depend on the issuing court and the type of garnishment, employers should follow the payment instructions contained in the garnishment order rather than relying on a general payroll schedule.

Child Support Garnishments

Child support and other family-support withholding orders are subject to different federal limits than ordinary creditor garnishments. Under federal law, withholding for support may generally reach up to:

• 50% of disposable earnings when the employee is supporting a spouse or dependent child other than the person covered by the support order;
• 60% when the employee is not supporting such a spouse or dependent child; and
• An additional 5 percentage points may apply when the support obligation is more than 12 weeks in arrears, resulting in maximums of 55% or 65%, respectively.

Child support income-withholding orders should be processed according to the applicable federal and state requirements and the instructions contained in the order.

Employee Exemption Claims

An employee may have rights to claim an exemption from garnishment. Alabama law provides a procedure for contesting garnishment and asserting an exemption claim. When an exemption is claimed, the claim generally must be filed in writing and verified as required by law. If the employee has notice of the garnishment, the exemption claim generally must be asserted before judgment of condemnation.

Employers should not independently determine whether an employee's exemption claim is legally valid. Instead, the employer should follow the garnishment order and applicable court or agency instructions and direct legal questions concerning an exemption to the appropriate issuing authority or legal counsel.

Federal Garnishment Limits Still Apply

Alabama employers must also comply with federal garnishment protections. For ordinary consumer debts, federal law generally limits withholding to the lesser of 25% of disposable earnings or the amount by which disposable earnings exceed 30 times the federal minimum wage. Different rules apply to child support, certain tax debts, bankruptcy-related obligations, and other categories specifically addressed by federal law.

The federal minimum wage used in the ordinary consumer-debt calculation is currently $7.25 per hour, so the applicable threshold should be calculated according to the employee's pay frequency and the federal rules in effect when the wages are payable.

Important Employer Compliance Point

A garnishment order should not be treated as a simple instruction to withhold a fixed percentage of gross wages. Payroll must determine the employee's disposable earnings, identify the type of debt, apply the applicable Alabama and federal limits, observe the required response and remittance procedures, and follow any subsequent modification, release, or termination order.

When state and federal requirements differ, employers should apply the requirement that governs the particular garnishment and provides the employee with the protection required by applicable law.

Common Garnishment Errors In Alabama To Avoid

• Failing to calculate the withholding amount correctly under federal and Alabama limits
• Missing the deadline to file the garnishee's answer or remit withheld wages
• Failing to recognize when a child support or other priority order takes precedence