If a judgment creditor wants to seize some of your property or wages in order to get paid, and that property is partly or fully exempt, you must file a claim of exemption in order to protect the property. Read on to learn about exemptions and how to file a claim of exemption to protect your property from a judgment creditor.
(For more about protecting your property with exemptions, see our Property Exemptions topic page.)
All states have laws that protect some of your property from judgment creditors, meaning the creditor cannot sieze it to enforce its judgment. In most states, your clothing, furniture, personal effects, and public benefits can’t be taken to pay a debt. Nor can some of the equity in your car and house, most of your wages, and most retirement pensions.
However, if the judgment creditor pursues a lien, levy, wage attachment, or assignment order against property that is exempt by state law, you must claim the property as exempt in order to protect it. You may also be able to claim that if the creditor takes the property, you will suffer financial hardship. (Learn more about liens, levies, and wage garnishments.)
Any time the sheriff or marshal levies against your property, you must be notified. You can request a hearing, which is usually called something like a claim of exemption hearing, to argue that it will be a financial hardship on you if the property is taken, or that your property is exempt under state law. If you lose that hearing and your wages are attached, you can request a second hearing if your circumstances have changed, causing you hardship (for example, you have sudden medical expenses or must make increased support payments).
Here is an overview of how a claim of exemption hearing normally works:
When your employer notifies you of a wage attachment request, or you are notified of a property levy (such as a bank account attachment) or an assignment order, you will be told in writing how to file a claim of exemption—that is, how to tell the judgment creditor you consider the property unavailable. The time period in which you must file your claim is usually short and strictly enforced—don’t miss it.
Complete and send a copy of your claim of exemption to the judgment creditor. In some states, you’ll also have to serve it on the levying officer, such as the sheriff. The judgment creditor will probably file a challenge to your claim. The judgment creditor may abandon the attachment, levy, or assignment order, however, if it’s too expensive or time-consuming to challenge you. If the creditor does abandon it, your withheld wages or taken property will be returned to you.
If the judgment creditor doesn’t abandon the attachment, levy, or assignment order, the creditor will schedule a hearing before a judge. If you don’t attend, you’ll probably lose. On the day of the hearing, come early and watch the way the judge handles other cases. If you’re nervous, visit the court a day earlier to get accustomed to the surroundings.
At the hearing, you’ll have to convince the judge that your property is exempt or that you need it to support yourself or your family. This is your opportunity to defend yourself from having your wages or other property taken. You must do all that you can to prepare for this hearing if you want to keep your property.
For example, if the creditor tries to take your “tools of trade,” which are exempt to a certain value in most states, bring along someone who works in your occupation. A supervisor, union boss, or shop leader can say that you use the items in your job. You’ll need to show that the items’ value does not exceed the exemption amount. If you have high income one month, bring in pay stubs to show that you usually make less. Or, if your bills are higher than average, bring copies. Think carefully about your income and financial situation. There may be other creative but truthful ways to show the judge that your property is exempt or necessary to support yourself or your family.
The judge will listen to both you and the judgment creditor, if the judgment creditor shows up. Sometimes the judgment creditor relies on the papers already filed with the court. The judge may make a ruling or may set up an arrangement for you to pay the judgment in installments.
This is an excerpt from Nolo's Solve Your Money Troubles: Debt, Credit & Bankruptcy, by Margaret Reiter and Robin Leonard.