Nebraska “Bank Account Garnishment”

Garnishment: A legal procedure by which a creditor can collect what a debtor owes by reaching the debtor’s property when it is in the hands of someone other than the debtor.

Bank Account Garnishment is hence the legal way that a creditor tries to get your bank to turn over the money in your bank account against a debt.

History and Evolution

Garnishment has its origin in an institution called foreign attachment developed in England during the Middle Ages. The custom of certain cities permitted a creditor whose debtor could not be found to attach the goods of the debtor in the hands of third persons within the city or the debts owed to the debtor by such third persons.

Today garnishment is commonly defined as a statutory process by which property, money, or credits of the defendant-debtor which are owed to him or held for him by another, the garnishee, are applied to the payment of the debt owed by the defendant-debt or to the plaintiff-creditor. It is in essence an ancillary proceeding, being dependent upon the suit between the plaintiff-creditor and the defendant-debtor. When brought before judgment in that suit, it must necessarily await its outcome.

Nebraska is a state within the United States of America (USA), which has a relatively refined statutes for bank account garnishment proceedings, supplemented by federal law.

Note: From here on the word Garnishment in this article will refer to Bank Account Garnishments

Scope

The garnishment statutes of Nebraska are contained in three subdivisions of Chapter 25 of the Revised Statutes 1943 (Reissue 1964).

They are entitled “Attachment” (sections 25-1001 to-1005), “Garnishment in Aid of Execution” (section 25-1056), and “Exemptions” (sections 25-1552 to-1563)

The bank account garnishment could be either a part of attachment or can be in aid of execution.

Exemptions

Exemptions are a certain amount of funds that are exempt from deduction even though a creditor has obtained a Garnishment order. The purpose of these exemptions is to ensure individuals have enough income and property to provide for basic necessities like housing, food, and utilities.

Nebraska statute provides for the following exemptions:

1. Every person in Nebraska is entitled to protect up to $5,000 on deposit with a bank ($2500 in case of individual account, $5000 in case of joint account)
2. Some of your money or benefits are considered entitlements, which means that they cannot be touched by creditors. In Nebraska these include the following:
   • Insurance benefits.
   • Life insurance or annuity proceeds up to $100,000 of the loan value. (Neb. Rev. Stat. § 44-371)
   • Fraternal benefits /society benefits are protected up to a $10,000 loan value. (Neb. Rev. Stat. § 44-1089).
3. The following public benefits and pension/retirement accounts are protected with no limit or to the amount stated:
   1. Public Benefits
      • Workers’ compensation benefits (Neb. Rev. Stat. § 48-149)
      • Aid to the blind, aged, disabled, and public assistance (Neb. Rev. Stat. § 68-1013)
      • Earned income tax credit (Neb. Rev. Stat. § 25-1553)
      • Unemployment compensation (Neb. Rev. Stat. § 48-647)
      • General assistance to the poor (Neb. Rev. Stat. § 68-148)
   2. Pensions
      • County employees’ retirement benefits (Neb. Rev. Stat. § 23-2322)
      • Military disability benefits, not exceeding $2,000 (Neb. Rev. Stat. § 25-1559)
      • ERISA (Employee Retirement Income Security Act)-qualified benefits necessary for support, including IRAs (Individual Retirement Account) (Neb. Rev. Stat. § 25-1563.01)
      • School employees’ retirement benefits (Neb. Rev. Stat. § 79-948)
      • State employees’ retirement benefits (Neb. Rev. Stat. § 84-1324)
4. Additionally, certain federal exemptions for retirement funds might also be available under (11 U.S.C. § 522(b)(3)(C)).
   • Social Security Retirement
   • Social Security Disability Income
   • Supplementary Security Income
   • Veteran’s Benefits
   • Federal Railroad Retirement
   • Federal Railroad Unemployment and Sickness
   • Federal Civil Service Retirement System
   • Federal Employee Retirement System

Procedure

There are two types of exemptions order:

1) self-executing

2) non-self-executing

Self-Executing exemptions have blanket protection, there can be no withdrawal from them, whatsoever.

Non-Self-Executing exemptions can be obtained only when the garnishment order is challenged in a court of law, which has to be done within three days of receiving the garnishment order notice by the creditor, by submitting a letter to the law clerk by the debtor.

Garnishment Law in India

The concept of ‘Garnishment’ has been introduced in the civil procedure code by the amendment Act, 1976.

Prior to this amendment in 1976, there was no provision relating to the garnishee order in the code of civil procedure, 1908. After insertion of this amendment, a direct provision was added to the Code of Civil Procedure (ORDER XXI, RULE 46A-46), which empowers the court to issue such an order on the application duly filed. It is the discretionary power of the court to issue a garnishee order and not a mandatory provision.

Conclusion

Nebraska Bank Account Garnishment is a balanced set of statutes, which has become even better with recent amendments. The power to issue a garnishment order is discretionary even in Nebraska and is decided on a case to case basis. Yet there are concerns due to misuse where creditors have been garnishing bank accounts for even rather small amounts or, garnishment from essential funds like education, health, etc. and leaving the debtors to either bear the brunt or go to a cumbersome court procedure. Hence there is still a place certain necessary amendments to make more favorable towards debtors.

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References:

https://upsolve.org/

https://www.legalaidofnebraska.org/how-we-help/resources/benefits/

https://www.hg.org/legal-articles/nebraska-bank-account-garnishments-56411

https://law.wlu.edu/deptimages/Law%20Review/66-1MyersPublished.pdf