What Is the Head of Household Exemption?
The head of household exemption in Florida, based on Florida Statutes, provides an exemption from garnishment of earnings payable to a head of household, whether denominated as wages, salary, commission, or bonus. A debtor must provide more than half of the financial support for another person to whom he has either a legal or moral obligation of support in order to qualify as head of household.
The supported person may be a child or an adult, and the supported person does not need to physically reside in the debtor’s homestead.
Can Both Spouses Be Head of Household?
When a husband and wife have a joint judgment debtor, only one of the spouses can be head-of-household. It is not enough, for instance, that a debtor earns more than his dependent spouse. The debtor must earn enough money from all sources that the debtor is the dependent’s primary source of support after considering the dependent’s income from all sources. Courts will also consider non-financial factors including evidence of which spouse is primarily in charge of financial decisions.
There is no dollar limit to Florida’s head of household exemption. The debtor who qualifies as a head of household may exempt unlimited amounts of earnings from garnishment.
Waiver of Head of Household Exemption
A debtor may waive his head-of-household exemption from a Florida wage garnishment. There are statutory provisions to protect consumers against making inadvertent, unwitting waivers. The law does not permit creditors to bury head of household waivers in fine print within complicated loan documents.
Waivers must be in a separate document attached to the debt agreement and must be presented in at least 14 point font. The waiver must clearly describe the wage garnishment exemption.
Many creditors will attempt to include written waivers in their stack of credit documents. Be careful not to inadvertently waive your wage garnishment exemptions by signing a waiver form.
Claim of Exemption
There is no established procedure for debtors to claim or assert head-of-household exemption before of a wage garnishment is issued. Filing a declaration of head of household in a court proceeding will not prevent a creditor from obtaining a writ of wage garnishment.
A garnished debtor asserts a head-of-household exemption in response to the judgment creditor’s wage garnishment writ. The garnished debtor can either file a claim of exemption with the court, or the debtor can file a motion to dissolve the wage garnishment and assert the exemption in the motion.
Once a claim of exemption is filed, the creditor will often file a denial of the claim of exemption. This is usually just a form filing. It will be up to you to prove your entitlement to your exemption at a hearing. Sometimes you or your attorney may be able to resolve the exemption issue directly with the opposing attorney before a hearing even takes place.
How to Prove Head of Household Exemption
Proving a head of household exemption in Florida is primarily done through documentation. Typical documentation includes prior two tax returns, pay stubs, and W2 statements for all income-earners in the household. In addition, it is a good idea to get documentation that shows who is paying for what expenses if there is more than one income-earner in the household.
Can Wages from Your Own Business Be Exempt?
A judgment debtor who owns and controls his own business may not qualify for head of household exemption against garnishment of compensation the business pays him. Florida state and federal courts have held that compensation paid a debtor from his own business is business profit from running a business rather than earnings for a salaried job within the wage garnishment exemption. It does not matter that the debtor reports the compensation on his federal tax return as W-2 wages and pays employment tax, and it does not matter if the debtor’s business compensation supports family dependents.
Courts have focused on the degree of control the business owner has over compensation. For example, in cases where the judgment debtor is the sole business owner and where the amount of salary fluctuates with business cash flow the head of household.
Nevertheless, there are ways to organize a business that pays the owner with money not subject to continuing wage garnishment. Self-employed debtors should consult an experienced attorney in order to protect their business compensation.
What to Do Next
We help people go through their assets and income and determine what is at risk of collection from a judgment creditor. We then develop a plan to protect any exposed assets from collection. If you’re interested in protecting your assets from monetary judgment creditors, contact us or schedule an appointment online.