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13.5.4 Notice Must Inform Debtor of Exemptions

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  3. Chapter 13 Enforcement of Judgments: General Principles, Constitutional Issues
  4. 13.5 Due Process Protections from Garnishment or Execution on Exempt Property
  5. 13.5.4 Notice Must Inform Debtor of Exemptions

13.5.4 Notice Must Inform Debtor of Exemptions

Numerous cases have set out a consistent set of guidelines as to what a garnishment notice must state in order to satisfy due process. The notice must inform the debtor that garnishment has occurred, describe major legal exemptions from garnishment, and describe what procedures the debtor can follow to contest the garnishment.270 Disclosing this information places little burden on creditors or the state because the information can be included in a preprinted form. These disclosures, on the other hand, are very important to the debtor, who often will not know of the existence of exemptions or how to contest an improper garnishment.

The courts have not required garnishment notices to list exhaustively all the potential legal exemptions. Courts have reasoned that this would place an excessive burden on creditors who would have to change the notice whenever federal or state exemption law changed,271 that the notice would be too complicated to be understood by most debtors,272 and that composing notices is widely regarded as a legislative task.273 However, notices violate due process if they do not at least mention some of the most important exemptions.274 In particular, courts have required notices to list the potential availability of exemptions for Social Security,275 TANF benefits,276 and wages.277 Other exemptions which may have to be listed include SSI, veterans benefits, unemployment compensation, workers’ compensation, alimony and child support, pensions, personal property, and lump-sum state exemptions.278 The list will vary from state to state.

Footnotes

  • 270 Aacen v. San Juan Cty. Sheriff’s Dep’t, 944 F.2d 691 (10th Cir. 1991); McCahey v. L.P. Inv’rs, 774 F.2d 543 (2d Cir. 1985) (reference to exemptions and fact that procedures exist, and suggestion to contact legal aid society, is sufficient); Dionne v. Bouley, 757 F.2d 1344 (1st Cir. 1985); Finberg v. Sullivan, 634 F.2d 50 (3d Cir. 1980); New v. Gemini Capital Grp., 859 F. Supp. 2d 990 (S.D. Iowa 2012) (denying judgment creditor’s motion for summary judgment; notice that did not disclose exemptions or method for claiming them was inadequate); Montanez v. Beard, 2012 WL 6917775 (M.D. Pa. Aug. 10, 2012) (fact issue whether sentencing hearing and new inmate orientation materials provided constitutionally adequate notice of procedure for contesting the taking of funds from inmate account for fines, fees, or restitution); Jacobson v. Johnson, 798 F. Supp. 500 (C.D. Ill. 1991); Neeley v. Century Fin. Co., 606 F. Supp. 1453 (D. Ariz. 1985); Reigh v. Schleigh, 595 F. Supp. 1535 (D. Md. 1984), rev’d on other grounds, 784 F.2d 1191 (4th Cir. 1986); Clay v. Fisher, 584 F. Supp. 730 (S.D. Ohio 1984) (due process requires prompt and adequate notice and hearing on exemption claims); Harris v. Bailey, 574 F. Supp. 966 (W.D. Va. 1983); Deary v. Guardian Loan Co., 534 F. Supp. 1178 (S.D.N.Y. 1982); Betts v. Tom, 431 F. Supp. 1369 (D. Haw. 1977); Collection Prof’ls, Inc. v. Logan, 695 N.E.2d 1344 (Ill. App. Ct. 1998) (amended Illinois postjudgment garnishment statute provided due process when it required debtors to be notified of garnishment, exemptions, procedure for claiming them, and hearing within two days of service of garnishment summons); Dorwart v. Caraway, 966 P.2d 1121 (Mont. 1998); Distressed Holdings, L.L.C. v. Ehrler, 976 N.Y.S.2d 517 (N.Y. App. Div. 2013) (holding that restraining bank account without providing notice of exemptions and method of claiming them was denial of due process, but refusing to lift restraint when creditor followed correct procedure and could not prevent bank’s failure to send required forms to debtor). See also Zeppieri v. New Haven Provision Co., 163 F. Supp. 2d 126 (D. Conn. 2001) (Connecticut postjudgment bank execution statute meets due process standards by requiring bank to send exemption claim form to debtor promptly after receiving execution); Hutchinson v. Cox, 784 F. Supp. 1339 (S.D. Ohio 1992) (denial of due process not to inform judgment debtor of exemptions to postjudgment execution and procedure for claiming them); Roy v. Smith, 735 F. Supp. 313 (C.D. Ill. 1990); Kirby v. Sprouls, 722 F. Supp. 516 (C.D. Ill. 1989); Washington v. Thompson, 6 S.W.3d 82 (Ark. 1999) (procedures for child support obligor to challenge out-of-state order, which require an affirmative request for a hearing by a deadline, meet due process, but it was error to deny hearing when obligor was sent inconsistent instructions about the procedure); Imperial Bank v. Pim Elec., Inc., 39 Cal. Rptr. 3d 432 (Cal. Ct. App. 1995) (due process satisfied when notice of possible exemptions given at time of seizure); First Resolution Inv. Corp. v. Seker, 795 A.2d 868 (N.J. 2002) (rejecting constitutional challenge to New Jersey notice procedure but recommending rule changes to give debtors more information about how to contest garnishment). Cf. In re Pontes, 310 F. Supp. 2d 447 (D.R.I. 2004) (tax sale notice must advise debtor of right of redemption); Resler v. Messerli & Kramer, Prof’l Ass’n, 2003 WL 193498 (D. Minn. Jan. 23, 2003) (allegation that garnishment notice failed to disclose certain state exemptions stated claims under Fair Debt Collection Procedures Act and state law).

  • 271 See Dionne v. Bouley, 757 F.2d 1344 (1st Cir. 1985); Reigh v. Schleigh, 595 F. Supp. 1535 (D. Md. 1984), rev’d on other grounds, 784 F.2d 1191 (4th Cir. 1986).

  • 272 Reigh v. Schleigh, 595 F. Supp. 1535 (D. Md. 1984), rev’d on other grounds, 784 F.2d 1191 (4th Cir. 1986).

  • 273 Neeley v. Century Fin. Co., 606 F. Supp. 1453 (D. Ariz. 1985). See also Brown v. Liberty Loan Corp., 539 F.2d 1355 (5th Cir. 1976).

  • 274 Strickland v. Alexander, 772 F.3d 876 (11th Cir. 2014) (allowing debtors, whose account, containing only exempt SSDI and workers’ compensation funds was frozen for months, to go forward with due process challenge to Georgia procedure, which ordered bank to freeze all property “except that which is exempt,” but did not list exemptions; debtors had standing because they subsisted solely on benefits and had other creditors who could garnish account), on remand, 153 F. Supp. 3d 1397, 1409, n.5 (N.D. Ga. 2015), as amended by 154 F. Supp. 3d 1347 (N.D. Ga. 2015) (notice must inform debtor of existence of exemptions and list most essential ones, including workers compensation); Aacen v. San Juan Cty. Sheriff’s Dep’t, 944 F.2d 691 (10th Cir. 1991) (due process violation when notice failed to reveal existence of exemptions other than homestead exemption or how to claim them). But see Reigh v. Schleigh, 595 F. Supp. 1535 (D. Md. 1984) (mere notice that there are federal and state exemptions was sufficient), rev’d on other grounds, 784 F.2d 1191 (4th Cir. 1986).

  • 275 Harris v. Bailey, 574 F. Supp. 966 (W.D. Va. 1983).

  • 276 Betts v. Tom, 431 F. Supp. 1369 (D. Haw. 1977).

  • 277 Neeley v. Century Fin. Co., 606 F. Supp. 1453 (D. Ariz. 1985). See also Roy v. Smith, 735 F. Supp. 313 (C.D. Ill. 1990).

  • 278 Aacen v. San Juan Cty. Sheriff’s Dep’t, 944 F.2d 691 (10th Cir. 1991) (due process violation when notice failed to reveal existence of exemptions other than homestead exemption or how to claim them); McCahey v. L.P. Inv’rs, 774 F.2d 543 (2d Cir. 1985) (upholding New York statute; notice included a list of common exemptions, including various public benefits, pensions, and family support); Hutchinson v. Cox, 784 F. Supp. 1339 (S.D. Ohio 1992) (denial of due process not to inform judgment debtor of personal property exemptions and that debtor could obtain a hearing to claim exemption); Green v. Harbin, 615 F. Supp. 719 (D. Ala. 1985) (consent decree).