The following is an article reprinted with permission from the upcoming Summer 2008 edition of The WWR Letter:
Significant Changes to Garnishment Proceedings in Ohio- Senate Bill 281 Becomes Law on September 30, 2008
By: Joe DeGiorgio, Esquire
On June 27, 2008, Ohio Governor Ted Strickland signed Ohio Senate Bill 281 (“SB 281”), which will become law in Ohio on September 30, 2008. SB 281 amends a total of seven sections of the Ohio Revised Code, but the primary effect of the new law is to amend those sections of the Revised Code that govern what property is subject to – and exempt from – garnishment by creditors. SB 281, therefore, is particularly relevant to (and will have far-reaching effects on) all debt collection activity throughout the state.
SB 281’s most important provisions relate to two distinct areas of Ohio garnishment procedure; it amends both the dollar amounts of property that may be held exempt, and it amends the procedure whereby creditors may garnish individuals’ property. This article discusses some of the more remarkable provisions of the bill.
Probably most notably, SB 281 amends § 2329.66 of the Revised Code to increase the dollar amounts of various categories of property, both real and personal, that any debtor (domiciled in Ohio) may hold exempt from execution and garnishment. While SB 281 does not create new exemptions – current law allows debtors to hold certain property exempt – the new law does significantly increase the dollar amounts of nearly all the already-existing exemptions. Some of the most significant changes to those amounts are as follows:
Property, used as residence: $5,000 (under current law), $20,200 (under SB 281)
Motor Vehicle (one): $1,000 (under current law), $3,225 (under SB 281)
Money received (or any right to receive money) in the past 12 months as payment for personal bodily injury (excluding pain and suffering): $5,000 (under current law), $20,200 (under SB 281)
Personal, family and household items: Specific dollar amounts for various individual property interests; $200 for one item of wearing apparel, beds, and bedding; $300 in one refrigerator; $400 for one item of jewelry and no more than $200 in every other item of jewelry (under current law); A more broadly-defined exemption category, with an aggregate dollar amount of $10,775 for most items, and $1,350 for jewelry held primarily for personal, family or household use (under SB 281)
“Other property” ***applicable only in bankruptcy proceedings: $400 in any property (under current law), $1,075 (under SB 281)
As noted above, the exemption for “other property” applies only to bankruptcy proceedings; it is inapplicable to the collection of debt from individuals and entities not involved in bankruptcy proceedings.
In addition to the above changes related to the dollar amounts of exempt property, SB 281 also alters the procedure that creditors must follow in order to garnish the property of a debtor.
Garnishment of Property Other than Personal Earnings
Garnishment of debtors’ property other than personal earnings is usually relevant when a creditor attempts to garnish funds held by debtors on deposit at financial institutions. A debtor’s bank account can, of course, be lawfully garnished – subject to the limitations and restrictions of the law – in order to satisfy a legal judgment. SB 281 alters the provisions of the Revised Code that govern the garnishment of property other than debtors’ personal earnings.
Most notably, SB 281 adds language to the law that shields garnishees from liability when a garnishee acts in good faith in carrying out the garnishment of property other than personal earnings. Specifically, SB 281 adds the following language to the law:
Any garnishee that garnishes the property, other than personal earnings, of a judgment debtor in good faith reliance upon the order and notice of garnishment received by ordinary or regular mail service shall not be liable for damages in any civil action. RC 2716.13(B).
Unlike the current state of the law, after September 30, 2008 garnishees will no longer be subject to civil liability, so long as garnishees act in good faith reliance on the order and notice of garnishment they receive
Garnishment of Personal Earnings
Under both current law and SB 281, all creditors wishing to garnish debtors’ personal earnings must first serve a written demand letter containing specific language. SB 281 makes changes to the required language contained within that required written demand. Currently, the demand must state that demand is made for the amount of the judgment over the amount of personal earnings that are exempt from garnishment. SB 281 makes a slight but significant change; it requires that the demand be made for the amount of the judgment owed over the amount of personal earnings that may be exempt from garnishment.
SB 281 also changes the required language for orders of garnishment that are sent to employers of judgment debtors (garnishees). Prior to September 30, 2008, the order must contain an affidavit stating that the garnishee owes the debtor money for personal earnings; the new law requires that the order state that the garnishee may owe the debtor money for personal earnings.
On September 30, 2008, when SB 281’s provisions go into effect, the law related to garnishment of property belonging to debtors domiciled in Ohio will change. While the day-to-day operations of your particular entity may not be drastically altered, all WWR clients should take note of the changes and, when applicable, ensure compliance with the new law’s terms.
Joseph D. DeGiorgio is an Associate in the Collection Services department of the Grove City office. He can be reached at (614) 801-2668 or firstname.lastname@example.org.
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