When Judgment Creditors Collect With an Assignment Order
Learn what an assignment order is and how a judgment creditor can use one to collect from you.
If a creditor sues you and gets a judgment, one way it can collect on the judgment is with an assignment order. An assignment order instructs another person or entity to turn over money to the creditor that would otherwise have gone to you.
(To learn about other ways judgment creditors can collect on judgments, see How Creditors Enforce Judgments.)
What Is an Assignment Order?
An assignment order lets creditors go after property you own that can’t be subjected to a levy, such as an anticipated tax refund, the loan value of unmatured life insurance, or an annuity policy. Independent contractors and other self-employed people who have no regular wages to be garnished are particularly susceptible to an assignment order against their accounts receivable.
How Assignment Orders Work
An assignment order is straightforward: The judgment creditor applies to the court for an order prohibiting you from disposing of money you have a right to receive -- such as a tax refund, insurance loan, royalties, dividend payments, or commissions. You are given the date and time of the court hearing and an opportunity to oppose issuance of an assignment order. If the creditor gets the order, the creditor serves it on whomever holds your money. When payment to you comes due, the money is sent to the judgment creditor instead.
Preventing the Creditor From Taking Your Money
You may be able to bypass the assignment order by negotiating with the creditor ahead of time (and settling the debt) or by claiming the property as exempt. To learn more, see Ways to Stop a Creditor From Collecting a Judgment.)
(To learn how creditors sue you, possible defenses, and more, see Creditor Lawsuits.)
This is an excerpt from Nolo's Solve Your Money Troubles: Debt, Credit & Bankruptcy, by Margaret Reiter and Robin Leonard.