Head of Household Garnishment Exemption
Some Florida debtors are exempt from wage garnishment. Section 222.11, Florida Statutes provides an exemption from wage garnishment for a debtor who is heads of household. To qualify for the head of household garnishment exemption in Florida, the judgment 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. 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.
A creditor cannot garnish “earnings” payable to a Florida head of household. Earnings includes compensation paid in the form of wages, salary, commission, or bonus. The earning exemption is meant to cover periodic payments from an employer to an employee debtor as compensation for the employee’s labor or services. Payments made to non-employee contractors are not exempt from garnishment.
In addition, the head of household debtor’s exempt earnings deposited in the debtor’s bank account remain exempt for a period of six months. The debtor must trace bank money to his employment compensation. Many judgment debtors maintain a separate bank account in which they deposit only exempt earnings to segregate the exempt deposits from all other sources of funds.
Wage Garnishments in Florida
A continuing wage garnishment is a powerful tool that judgment creditors use to collect money judgments. Upon request to a clerk of court a judgment creditor can obtain and serve a writ of wage garnishment on a debtor’s employer. Thereafter, the employer is required to withhold 25 percent of the debtor’s net after- tax wages, and the employer must pay the withheld portion to the employee’s judgment creditor. The wage garnishment continuous until the judgment is paid or employment terminates. Garnishment rules are expressed in Chapter 77 of Florida law.
Can Both Spouses Be Head of Household?
Qualifying for a head of household exemption is difficult when a creditor has a joint judgment against two spouses. Only one of the spouses can be head of household.
The higher earning of the two debtor-spouses does not always qualify for the heard of household garnishment exemption when the spouses have no dependent children. If there are joint debtor spouses without other dependents then the head of household debtor must be the other debtor spouse’s primary source of support after considering the other spouse’s separate income from all sources.
This means that in cases of joint judgments against two spouses, one debtor spouse must earn more than twice as much as the other debtor spouse for the higher earning spouse to qualify for the wage garnishment exemption. Courts will also consider non-financial factors including evidence of which spouse is primarily in charge of financial decisions.
If the joint debtor spouses have a dependent child then the higher earning spouse will be considered head of household because he will be contributing more than half of the parent’s support of the child.
Limit of Head of Household Exemption
There are no dollar limits to Florida’s head of household exemption. The debtor who qualifies as a head of household may exempt unlimited amounts of earnings from garnishment. The exemption is not limited also by the amount of the civil judgment.
Waiver of Head of Household Exemption
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 head of household waivers in their stack of credit documents. Borrowers must be diligent not to inadvertently waive their head of household exemption in the event of a loan default.
How to Claim Head of Household Exemption
There is no way for a debtor to claim or assert head-of-household exemption in advance 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 after a money judgment is entered.
A 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.
After the debtor has filed a claim of head of household the creditor may file a denial of the exemption. The debtor has the legal burden to prove at a court hearing that he qualified for a head of household exemption from wage garnishment. Proving a head of household exemption in Florida requires documentation such as prior income tax returns, pay stubs, and W2 statements for all income-earners in the household. In addition, the debtor can offer evidence of his payment of household expenses or child support expenses if there is more than one income-earner in the household.
Often, the debtor’s attorney can resolve the head of household issue directly with the creditor without a hearing by providing the creditors documents supporting the garnishment exemption.
Can a Business Owner Qualify For the Head of Household Wage Exemption?
A judgment debtor who owns and controls his own business may not be able to qualify for head of household exemption against garnishment of salary from his business. Florida courts have held that in most cases the compensation paid a debtor from his own business is business profit rather than earnings within the wage garnishment exemption. It does not matter that the debtor reports business earnings on his federal tax return as W-2 wages and pays employment tax, and it does not matter if the debtor proves he needs the business earning to support dependents.
Courts have focused on the degree of control the business owner has over his own compensation. In cases where the judgment debtor is the sole business owner and where the amount of salary fluctuates with business cash flow courts have denied the debtor/business owner the head of household exemption.
Nevertheless, there are ways to organize a business so that periodic payments to the debtor/owner are not subject to continuing wage garnishment.
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.
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