Proceedings Supplemental-What Can a Creditor Take From Me?
I got a notice telling me to appear at a “Proceedings Supplemental.” What does that mean?
If you get a notice ordering you to appear at a Proceedings Supplemental (also called an “Order to Appear and Answer” or a “Proceedings Supplementary)” it means you were sued in court and the judge has already entered a judgment against you. Now the creditor wants to collect the money the court says you owe. If you do not know anything about the judgment, you can contact the court which entered the judgment to get more information. If a default judgment was entered against you, it is possible to ask the court to set aside the default judgment.
A Proceedings Supplemental is a court-ordered meeting between you and the judgment creditor (the person who got a judgment against you) to determine whether you have any way to pay the judgment. The judgment creditor will want to know about your income, savings and property. Your bank or employer may also have to give information to the creditor and the court. The purpose of a Proceedings Supplemental is to decide how you will pay the judgment. You can make arrangements to pay the creditor, your property can be sold, or your wages can be garnished unless you are judgment proof.
Do I have to go to the Proceedings Supplemental?
Yes. If you don’t go, you may be found in contempt of court and a “body attachment” (like an arrest warrant) can be issued. You could then be arrested and put in jail until another court date is set. If you miss a Proceedings Supplemental hearing, you should contact the court and ask that another court date be set.
Also, you need to go to the hearing so you can answer questions regarding your income and property AND to tell the court what exemptions you are entitled to claim, so that your creditor cannot take those items.
What will happen during the Proceedings Supplemental?
The judgment creditor and/or the court will ask you questions about your income and what property you own. You may want to bring proof of your income, such as paycheck stubs, or proof of social security benefits you receive. Sometimes you will actually meet with the judgment creditor, and not go in front of the judge. You can try to work out a payment arrangement with the judgment creditor. Before you agree to make payments, you should make sure you understand what a judgment creditor can and cannot do to get his or her money. You do not have to make an agreement with the judgment creditor; you can ask to go before the judge.
You cannot be sent to jail because you cannot pay your debt.
What is the difference between a creditor and a judgment creditor?
A creditor is someone you owe money to. A judgment creditor is someone who has gone to court and gotten a court judgment against you saying that you owe money to that judgment creditor.
I offered to pay the judgment creditor $25 a week. Can he still make me go to court for a Proceedings Supplemental hearing?
Yes. The judgment creditor does not have to accept a payment arrangement from you. The judgment creditor can instead make you come to a Proceedings Supplemental so the judgment creditor can see how much money and property you have.
Can the judgment creditor make me sell my house or my property?
If you own real property (such as a house or land), a judgment is automatically a lien on your real estate. This means that before you sell the property, you will have to pay off the judgment. The judgment creditor can also ask the court to order you to sell some of your property to pay a judgment. (This is usually done only if you own a large amount of property or very valuable property). The judgment creditor generally cannot just take your property; the judgment creditor must get a court order first.
However, the judgment creditor can’t ask to sell any of your property that is “exempt property.” “Exempt property” is protected from creditors and cannot be taken. YOU have to tell the court what property you believe is exempt.
What are the exemptions?
The basic exemptions are:
- $15,000 for a house or mobile home if you are single.
- $30,000 for a house or mobile home if you are married and both spouses owe the creditor (if only one spouse owes, the property cannot be touched).
- $8,000 for other real estate and personal property (furniture, cars, household goods, cash, electronics, and jewelry).
- $300 in bank accounts, stocks and bonds.
- All health aids.
- Interests in some pension or retirement funds.
- Earned income credit refunds (IRS Code §32) received, or to be received.
- Certain educational funds.
The creditor can ask the court to order your property to be sold if the equity value is more than your exemptions. Equity is the value of the property minus the amount you owe for it.
For example, assume you have a car that is worth $6,000. You owe $5,000 on the car. Your equity value is $1,000. You can exempt the car under the $8,000 personal property exemption listed above, and you will still have $7,000 for other personal property exemptions.
YOU ARE ENTITLED TO THESE EXEMPTIONS, BUT YOU MUST ASK FOR THEM WHEN YOU GO TO COURT.
Can the creditor take my paycheck?
If your paycheck is more than a certain amount, the creditor may ask the Court to garnish your wages. Garnishment is a court order to your employer telling him or her to take out some of your wages, and pay it directly to the court for the creditor.
Your wages can be garnished only if there is a judgment against you AND your weekly take-home pay is more than $175.50. This figure is based on 30 times the minimum wage (30 x $5.85) and will change if the minimum wage changes. If your weekly take-home pay is more than $175.50 per week, the court will use two formulas to determine how much of your check can be garnished. The court will order your employer to take out the lesser of:
- 25% of one week’s take-home earnings; or
- The total amount by which a week’s take-home earnings is more than $175.50 (30 x minimum wage).
For example, if your take-home pay is $300 the court could garnish the lesser of:
- 25% x $300 = $75 or
$300 - $175.50 = $124.50
So the court could order up to $75 to be garnished from your weekly check.
NOTE: Different rules apply if you owe child support or if you owe money to the government for taxes or student loans. Contact an attorney if you have judgments on these debts to see what can be taken.
Can the creditor take my governmental benefits, like Social Security?
Most governmental benefits, like TANF, unemployment compensation, and veteran’s benefits, CANNOT be garnished. Generally, Social Security benefits CANNOT be taken to pay debts. SSI can never be taken to pay any debt.
SSD CANNOT be taken by private creditors (such as credit card companies or landlords). There are a few times SSD can be taken for debts owed to the government (such as student loan debts, food stamp overpayments) and for past due child support. There are limits to how much SSD can be taken for these debts. If a creditor tries to take your SSD, you should contact an attorney.
Can more than one creditor take money from my paycheck at one time?
It is possible to have more than one garnishment taken out at a time. HOWEVER, the limits on the amount of garnishment still apply. If one judgment creditor is garnishing the maximum allowed by law, other judgment creditors cannot garnish your income until the first judgment creditor has been paid.
What does “judgment proof” mean?
If your assets are less than the above exempt amounts and your take-home pay is less than $154.50 per week, you are judgment proof. This means that the creditor cannot collect from you at this time. The creditor may summon you to court from time to time during the first ten years after the judgment to see if you have any more income or property. After ten years, the creditor must get court approval to continue collection efforts on the judgment.
LSC Special Code 1020400
Last revised 07-05
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