Garnishment Reform

April 21 2007

By Jerry Kopel

 

 

Once again, the little guy wins.

 

The legislature has changed the statutes to protect the low income wage earner who is just above or below the poverty line.

 

After getting a judgment, creditors use garnishment to collect money from debtor's wages. SB 158 by Sen. Betty Boyd and Rep. Mike Cerbo set a ceiling on the level of wages that cannot be attached by creditors. The Colorado Bar Association supported the bill, which has passed the legislature.

 

Presently, under CRS 13-54-104, a debtor can protect 75 percent of the disposable earnings for that week or an amount equal to 30 times the federally approved minimum hourly wage.

 

In 2006, the voters in Colorado passed an amendment to Article 18 of the state constitution, which is labeled Section 15. It provides a minimum wage of $6.85 per hour "adjusted annually for inflation as measured by the Consumer Price Index used for Colorado."

 

SB 158 adds that recent constitutional minimum wage to the choices allowed a debtor under CRS 13-54-104. It will save the aggregate disposable earnings  which are equal to or less than that sum.

 

Example: Under present law, someone who took home $200 per week might lose $50 through garnishment. Under SB 158, the first $6.85 times 30 is saved from garnishment. That is $205. For that creditor, there is no sum to be garnished.

 

For someone taking home $250, using the minimum wage section instead of the 75 percent section would still save the wage earner money, paying out $44.50 instead of $62.50. But if you took home $300, you would take shelter under the 75 percent category, since using the minimum wage version would cost you $95 instead of $75.

 

The changes do not affect statutory exceptions, such as for taxes owing or child support owing, or other specified statutory sums.

 

The original Colorado garnishment law was written prior to Colorado becoming a state and was inserted into the legislature's laws of 1877. Until 1965, the language had never been changed: "No order of attachment shall be made or issued in any court of record in this state for any sum less than $20."

 

The inflation of money during the following 88 years had destroyed the legislative purpose for the original adoption of the statute. In 1877 $20 constituted a month's wages for an ordinary laboring citizen.

 

In our state, a defendant is supposed to be entitled to his or her day in court. But the system of attaching wages under the original law was done prior to a determination by a court that a debt was actually owing.

 

For 88 years as a state, we allowed a wage earner's most valuable asset, his income, to be taken from him simply on the word of an alleged creditor that the sum was owing, and prior to the wage earner having his or her day in court.

 

A Denver Post editorial in 1965 urged the law be changed. "If the person has some legitimate reason for not paying a bill, he has no chance, under the procedure, to explain to the court or to anyone else.

 

"An unjust  garnishment may cost an employee his job and it may make it impossible for him to pay other creditors to whom he is legitimately indebted. Some creditors abuse the garnishment procedure, and it has taken a high toll in human suffering."

 

In 1965, the garnishment law was changed in HB 1038, referred to in the Post editorial. It  provided the garnishment could not occur until after a complaint had been filed, the defendant had become subject  to the jurisdiction of the court and the garnishment followed a court judgment against the defendant.

 

Creditors and collection agencies opposed the bill, and successfully amended it to keep the $20 figure instead of the proposed $100. But they still urged Gov. John Love to veto the need for a judgment before garnishment. He met with me as chief sponsor and agreed the law needed changing.

 

In 1969, the U.S. Supreme Court decided that garnishment of wages prior to a judgment was a denial of due process, making all such state laws similar to Colorado prior to 1965, unconstitutional.

 

The garnishment revision in SB 158 takes effect  July 1, 2007.

 

(Jerry Kopel served 22 years in the Colorado House.