By Ryan C. Wood
Yes, creditors can garnish wages in California. But can two creditors garnish your wages at the same time? The answer appears to be no. California Code of Civil Procedure Section 706.230(c) provides that an employer is to honor or comply with the first earnings withholding order served upon the employer. So what if your employer receives an earnings withholding order that was to withhold $50.00 from your check each pay period to satisfy a judgment totaling $20,000 and then your employer receives another withholding order that is attempting to withhold from your earnings the full statutory allowed about of 25%? According to CCP §706.023(c) your employer should return the second earnings withholding order as ineffective given that they have to honor the first earnings withholding order and start the wage garnishment at $50 a pay period.
What is the effect of this? To satisfy a $20,000 judgment at $100 a month, assuming the person is getting paid twice a month and $50 is withheld each check; it will take approximately 200 months or about 16 years to satisfy the judgment of the first earnings withholding order. So it would appear that a debtor could collude with a friendly creditor to have his wages garnished at a very low amount and thwart any other attempts to garnish their wages until the first earnings withholding order is satisfied and released levying officer.
The Ninth Circuit Bankruptcy Appellate Panel had to address this issue in a 2007 in the bankruptcy case of In re Tiffany, Bankr. Case No. 93-58255. In this case a creditor of the debtor obtained a judgment against the debtor for a not dischargeable debt totaling $1,147,054.79. The creditor then tried to garnish the debtor’s wages, but another creditor had already served an earnings withholding order on the debtor’s employer. The employer returned the earnings withholding order to the creditor as ineffective and the creditor litigated the issue all the way to the Ninth Circuit Bankruptcy Appellate Panel.
The opinion is not for publication though and can only be used for persuasive purposes. Nonetheless, the Ninth Circuit BAP held that the statutory language is not ambiguous and it clearly says that an employer has to comply with the first earnings withholding order received and return the second as ineffective.
In the Tiffany case the creditor also tried to argue that given that the first creditor only ordered $50 per check to be withheld that leaves plenty of disposable income of the debtor for them to garnish wages of the creditor. Again, the court held that this does not matter pursuant to the plain language of CCP §706.050. This section clearly says to withhold earnings pursuant to CCP §706.050 or such other amounts specified in the earnings withholding order. In this case a mere $50 per paycheck even though the debt could arguably afford to have much more withheld.
The legislature could change the law regarding this issue at any time to prevent this result. There also could be equitable remedies pursued to prevent this result also. This article is only addressing when two creditors seek to have your wages garnished close in time and does not address when a taxing authority or other entity issues an earnings withholding order along with a normal judgment creditor.