Florida Garnishment Exemptions

Florida garnishment exemptions protect certain types of income and property from being seized by creditors. These exemptions include head of household wages, Social Security benefits, and a portion of disposable earnings, ensuring that debtors can maintain a basic standard of living while addressing their debts.

The most important garnishment exemption is the head of household exemption. The exemption is asserted as a defense to garnishment of a debtor’s wages. The exemption allows a judgment debtor to exempt their earnings from garnishment, including salary, wages, commissions, or bonus. The exemption is provided by section 222.11 of the Florida statutes.

In Florida, a debtor is considered to be head of household if their earnings provide more than half of the financial support for another person to whom they have 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. Payments of court-ordered alimony or child support are considered payments required to support a dependent even when the former spouse or child does not reside with the debtor.

Garnishment Exemption Statute

The Florida statutes provide that a judgment creditor cannot garnish earnings consisting of wages, salary, commission, or bonus payable to a Florida head of household. The earning exemption is meant to cover periodic payments from an employer to an employee debtor as compensation for the employee’s personal labor or services. Payments made to non-employee independent 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 six months. The debtor must be able to trace the bank account money to their 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.

Income Tax Dependents

Whether or not a person is a dependent for purposes of the head of household exemption is different from the issue of whether the same person qualifies as a dependent for tax purposes. In most cases, a person supported by a Florida head of household also is named as a dependent on the person’s federal income tax form—examples being spouses and minor children. But people who do not qualify as dependents for tax purposes may still be persons supported by a head of household under Florida law—examples being an elderly parent or adult child living at home.

Claim of Exemption in Florida

In Florida, a claim of exemption is the statutory form used to formally claim an asset as exempt from a garnishment. There is no way for a debtor to claim the head of household exemption before a wage garnishment begins. Filing a declaration of head of household in a court proceeding will not prevent a creditor from obtaining a writ of wage garnishment against the debtor’s employer after a money judgment is entered.

Debtors properly assert their exemption head of household exemption in response to the judgment creditor’s wage garnishment writ. The garnished debtor can file either a claim of exemption with the court or 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 exemption, the creditor may contest the exemption by filing a denial of the exemption. The debtor has the legal burden to prove at a court hearing that they qualify 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 their payment of household expenses or child support expenses if there is more than one income-earner in the household.

The debtor’s attorney can often resolve the head of household issue directly with the creditor without a hearing by providing the creditor documents supporting the garnishment exemption.

Continuing Wage Garnishments in Florida

A continuing wage garnishment is a powerful tool to collect money judgments. Garnishment rules are found in Chapter 77 of Florida law. Upon request to a clerk of court, a judgment creditor can obtain and serve a continuing writ of wage garnishment on a debtor’s employer. After that, 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 creditor is not required to obtain additional garnishment writs to garnish future earnings. The initial wage garnishment continues in effect without further creditor action until the judgment is paid or employment terminates.

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 person can be head of household.

The higher-earning of the two debtor-spouses does not always qualify for the head of household garnishment exemption when the spouses have no dependent children. Suppose there are joint debtor spouses without other dependents. In that case, 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 at least 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 they will be contributing more than half of the parent’s support of the child.

Dollar Limits to 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 also not limited by the amount of the civil judgment.

Waiver of Head of Household Exemption

A debtor may waive their head of household exemption from a Florida wage garnishment in writing. Waivers are frequently part of promissory notes and consumer debt contracts.

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 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.

Can a Business Owner Qualify For the Head of Household Wage Exemption?

A judgment debtor who owns and controls their own business may not be able to qualify for head of household exemption against garnishment of salary from their business. Florida courts have held that in most cases, compensation paid to a debtor from their own business is business profit rather than earnings within the wage garnishment exemption.

It does not matter that the debtor reports business earnings on their federal tax return as W-2 wages and pays employment tax. It does not matter if the debtor proves they need the business earnings to support dependents.

Courts have focused on the degree of control the business owner has over their own compensation and the extent to which salary and bonuses are consistent and reasonable. In cases where the judgment debtor is the sole business owner and salary fluctuates with business cash flow, courts have denied the debtor/business owner the head of household exemption. Contrarily, a business owner may be able to assert head of household where there are other business partners with adverse economic interests who must approve earnings paid to the debtor.

Here are some factors courts have considered in determining whether business payments to a debtor owner are profit distributions or earnings for labor:

• How do the business accounting records characterize payments to the debtor?
• Is there an arms-length and reasonable written employment agreement?
• To what extent does the debtor control the amount and timing of payments under the terms of business documents?
• Are the amounts of payments claimed as earnings consistent or do payments vary with business cash flow?
• Did the business change the amount or characterization of its payments to the debtor in reaction to the debtor’s litigation?

Asset protection planning for business owners should include provisions in business documents (LLC operating agreements, corporate minutes, etc.) that provide for the possibility of the business paying reasonable compensation consistent with customary industry standards pursuant to the terms of a written employment agreement between the business and the employed owner. Additionally, if the debtor is the business’s manager or chief executive, they should not unilaterally determine the amount and payment of their own compensation.