Debtor or creditor are words you have probably heard before, but you might not be sure what they mean. They describe a relationship where one party owes money to another party. The debtor is the party that owes the money (debt), while the creditor is the party that loaned the money. For example, if Jay loans Reva $100, Reva is the debtor and Jay is the creditor. One way to remember this is that the debtor is the party that owes the debt.
While we may borrow money in many contexts without thinking of ourselves as “debtors,” most of us are typically debtors in some situation. Many people use credit cards, making them the debtor to their credit card company.
When we use “debtor” and “creditor” in these contexts, it does not mean that the “debtor” is overdue on their bills. It also does not mean that the “creditor” is doing anything special to collect the borrowed money from the debtor. However, we continue to use the terms “debtor” and “creditor” when the debtor is behind on their payments and the creditor is taking special measures to collect money from the debtor.
If you are behind on your debts, know that there are rules about what peoplecan do to collect money from you. The other articles in this section discuss some of those limits. Plenty of additional information is available on this area of the law, including from the Iowa Attorney General’s Office and from Iowa Legal Aid.
FAQs
It refers to a legal process that instructs a third party to deduct payments directly from a debtor's wage or bank account. Typically, the third party is the debtor's employer and is known as the garnishee.
What does garnishment mean? ›
Legal Definition
garnishment. noun. gar·nish·ment ˈgär-nish-mənt. : a remedial device used by a creditor to have property of the debtor or money owed to the debtor that is in the possession of a third party attached to pay the debt to the creditor.
Can you be garnished twice for the same debt? ›
It is not legal for your wages to be garnished twice by two different employers for the same debt. This is known as double-dipping and it is not allowed by law. The court and/or IRS should provide you with an itemization of the alleged debt so that you can determine if it is accurate and why you owe it.
What happens when a garnishment is paid in full? ›
The creditor should notify your employer when the debt is repaid and you should start receiving your regular paycheck again. If this does not happen and money is still being withheld from your paycheck, then you should make sure the creditor notifies the employer.
What is the meaning of debtor? ›
A debtor is a company or individual who owes money. If the debt is in the form of a loan from a financial institution, the debtor is referred to as a borrower, and if the debt is in the form of securities—such as bonds—the debtor is referred to as an issuer.
What is an example of a garnishee? ›
For example, the IRS may issue a wage garnishment if an employee owes taxes. Employers: The employer, or “garnishee,” is responsible for complying with a wage garnishment order by withholding and remitting payments.
How does garnishment work in Iowa? ›
The garnishment process often starts after a creditor gets a judgment in court against a debtor. If a creditor gets a judgment against you, your employer will get a notice. The notice tells your employer they must withhold a specific amount of your wages. You'll get notice of the garnishment, too.
Which states prohibit bank garnishment? ›
What States Prohibit Bank Garnishment? Bank garnishment is legal in all 50 states. However, four states prohibit wage garnishment for consumer debts. According to Debt.org, those states are Texas, South Carolina, Pennsylvania, and North Carolina.
What is the most a credit can garnish? ›
Limitations on the Amount of Earnings that may be Garnished (General)
| Weekly | Biweekly | Monthly |
|---|
| $290.00 or more: MAXIMUM 25% | $580.00 or more: MAXIMUM 25% | $1,256.66 or more: MAXIMUM 25% |
2 more rowsYou can stop a garnishment by: Paying off the debt in full. Filing an objection to the garnishment with the court if you have legal basis, such debt was a result of fraud or identity theft. Filing for court protection and debt resolution through Chapter 13 or Chapter 7 bankruptcy.
a judgment creditor of your spouse can garnish your joint accounts, and. if you have your own separate bank account and a judgment is taken against your spouse, that creditor can also garnish your separate account to pay for your spouse's debt.
How many times can your bank account be garnished? ›
A bank levy is a one-time action, but the creditor or collector can return to court to request it again.
Can a garnishment drain your bank account? ›
When you owe money and do not pay, you risk having any money in an account at a bank or credit union automatically withdrawn to pay your debt. This is called bank account garnishment or bank account levy. Creditors trying to collect commercial debt must go to court to get an order of bank account garnishment.
Will a garnishment automatically stop? ›
The creditor will continue to garnish your wages until you pay the debt in full or take some measure to stop the garnishment, such as claiming an exemption with the court. Your state's exemption laws determine the amount of income you'll be able to keep.
How do I stop a garnishment after paying off? ›
6 Options If Your Wages Are Being Garnished
- Try To Work Something Out With The Creditor. ...
- File a Claim of Exemption. ...
- Challenge the Garnishment. ...
- Consolidate or Refinance Your Debt. ...
- Work with a Credit Counselor to Get on a Payment Plan. ...
- File Bankruptcy.
Wage garnishment is a legal procedure in which a person's earnings are required by court order to be withheld by an employer for the payment of a debt such as child support.
What is a synonym for the word garnishee? ›
synonyms: garnish. type of: attach, confiscate, impound, seize, sequester. take temporary possession of as a security, by legal authority.
What is the most they can garnish from your paycheck? ›
Federal law places limits on how much judgment creditors can take. The garnishment amount is limited to 25% of your disposable earnings for that week (what's left after mandatory deductions) or the amount by which your disposable earnings for that week exceed 30 times the federal minimum hourly wage, whichever is less.
What is another name for garnishment? ›
garnishment (noun as in adornment) Strong matches. beautification decoration embellishment gilding ornament ornamentation trim trimming.
