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Texas turnover exception to wage garnishment exemption

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In Texas, current wages are exempt from garnishment.  Texas Constitution – Article 16 Sec. 28. Garnishment of wages. “No current wages for personal service shall ever be subject to garnishment, except for the enforcement of court-ordered: (1) child support payments; or (2) spousal maintenance.”

However,  garnishment is only one of many procedural methods by which a judgment creditor can collect a judgment debt in Texas. Another method is the turnover, which is a broad statutory collection remedy that allows Texas courts to assist creditors in their collection efforts.  The court may also order the turnover of a debtor’s property. Tex. Civ. Prac. & Rem.Code Ann. § 31.002 (Vernon 1997); see Schmerbeck v. River Oaks Bank, 786 S.W.2d 521, 521-22 (Tex. App.-Texarkana 1990, no writ); see generally Greiner v. Jameson, 865 S.W.2d 493, 498 (Tex. App.-Dallas 1993, writ denied).

The collection remedy of garnishment applies to debts owed to or property of the judgment debtor in the hands of third parties. The Texas turnover process extends to property or assets in the hands of the debtor herself.

Once current wages are paid to the debtor, they not only fall outsider the reach of a garnishment proceeding, they also cease to be “current wages.”  Wages cease to be “current” within the meaning of Texas exemption laws immediately on being paid to and received by the wage earner. Sutherland v. Young, 292 S.W. 581, 583 (Tex.Civ.App.—Waco 1927, no writ). Wages are no longer current, or exempt from execution to satisfy a judgment debt, when the paycheck is received by the employee.

Thus, once in the hands of the employee debtor, the money received as wages can be seized by court order.

However, the court’s order to require the turnover of money received as wages is a matter of the court’s discretion. Barlow v. Lane, 745 SW2d 451 (Tex.App. – Waco [10th Dist.] 1988, writ denied)

“Nevertheless, it is also our view and holding that the granting or not of appellant’s application for the turnover order under section 31.002 was addressed to the sound discretion of the trial judge. The statute provides in subparagraph (b) that the court (1) may order the judgment debtor to turn over nonexempt property to a designated sheriff or constable for satisfaction of the judgment; or (2) may otherwise apply the property to the satisfaction of the judgment; or (3) may appoint a receiver with the authority to take possession of the nonexempt property toward satisfaction of the judgment. The word “may” in a statute is sometimes construed as if it were “shall,” but it is not to be denied its primary and ordinary signification as a word of permission rather than a word of command unless there is something either in the subject-matter or the context of the statute to indicate a legislative intention that it was used as a word of command. American Mortgage Corporation v. Samuell, 130 Tex. 107, 108 S.W.2d 193, 198-99 (1937).

* * *

“The purpose of current wages being exempt from garnishment and execution is to protect the employee in meeting and defraying the current expenses of his living. Bell v. Indian Live-Stock Co., 11 S.W. 344, 346 (Tex.1889); Sloan v. Douglass, 713 S.W.2d 436, 440 (Tex.App.—Fort Worth 1986, no writ). In light of the use of the permissive word “may” in section 31.002 in setting forth relief that might be allowed a creditor by the court, and the predicate for entitlement for relief required to be proven by the judgment creditor, we cannot believe the Legislature intended to mandate relief in any case of proof of qualification by the creditor regardless of hardship resulting to the debtor. Appellee’s undisputed testimony in her deposition established that her paychecks are used solely and fully to provide food, shelter and other necessities for her family. We believe the trial judge was entitled to consider these facts and decide against granting the turnover relief sought where there was no showing of wages received in excess of current living expenses. Furthermore, in light of these facts, we hold there was no abuse of discretion in the court’s denial of the application.”

Barlow v. Lane, supra.

Davis v. Raborn, 754 SW2d 481 (Tex.App.— Houston [1st Dist.] 1988, writ granted) took a different path, holding that a debtor could not presently be ordered to turn over future wages not yet paid.

Subsequently, the Texas Legislature amended section 31.002 to add the following subpart (f):

A court may not enter or enforce an order under this section that requires the turnover of the proceeds of, or the disbursement of, property exempt under any statute, including Section 42.0021, Property Code. This subsection does not apply to the enforcement of a child support obligation or a judgment for past due child support.

The new section was intended to specifically exempt paychecks, retirement checks, individual retirement accounts and other such property exempted under the bankruptcy code. House Committee On The Judiciary, Bill Analysis, Tex.H.B. 1029, 71st Leg., R.S. (1989). See: Caulley v. Caulley, 806 SW2d 795 (Tex.1991)

“By prohibiting the turnover of the proceeds of property exempt under any statute, this section necessarily prohibits the turnover of the proceeds of current wages. Tex.Prop.Code § 42.002(8) (listing current wages as one of the personal property items exempt from attachment, execution, and seizure by creditors).”

Caulley v. Caulley, supra


Written by Tom Fox

June 6, 2014 at 6:36 am

Posted in Uncategorized

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