LB 327 – Garnishment Fees?

Senator Williams introduced legislative bill 327 in 2015, which “would permit a garnishee to charge a garnishment fee and collect the fee out of the property or credits in the possession or under the control of the garnishee.” That quote was taken from the summary provided in the Committee Statement on the bill.

 

What does this mean for those getting their wages garnished?

 

Let’s start with some basic observations.

 

First, the Judiciary Committee statement notes that the Nebraska Banker’s Association was one of the proponents of the bill and provided verbal testimony supporting LB 327.

 

Second, the Nebraska Collectors Association provided verbal testimony in the same committee session opposing LB 327.

 

Third, it appears, from how I’m reading the language of the bill, that the bill would only apply to property or credits, and not to wages of a debtor. I’m not really sure what that means, but I’m going to guess that a debtor’s paycheck shouldn’t be affected by this bill. *Fingers crossed* [But what if you have money in your account from last month’s paycheck – does that convert to property or credits that then become available to garnish under this law?]

So what does the banker’s association want that the collectors association doesn’t want?

 

I suspect that, like most banking agendas, it has to do with assessing small fees that add up to big bucks for banks. The way I read the language of the bill, the banks want to charge a garnishment fee any time a collector serves a garnishment summons on a bank for a debtor.

 

But the million dollar question is: Who pays this garnishment fee?

I’m going to direct quote the language of the bill itself:

 

Neb. Rev. Stat. 25-1010(2), page 2, line 29 of LB 327: “subject to the right of the garnishee, if authorized to charge a garnishment fee or similar fee, to collect the fee by deducting the amount of the fee from any property or credits of the defendant, other than wages, in the possession of the garnishee prior to remitting such property or credits pursuant to direction from the court…”

 

If you read this bill the way I am reading this bill, it proposes to take the fee from the debtor, put it into the banks pocket, just because you get garnished by a creditor. Yikes. But wait….

 

Apparently there is an amendment proposed to the bill, which states that “AM 1777 would require the payment of fifteen dollar fee by the Plaintiff to a financial institution garnishee at the time of service of a garnishment summons. If the financial institution is authorized to charge a garnishment processing fee, the fifteen dollars would be deducted from such a fee.”

 

That amendment language seems to make a 180 degree pivot, and assess the bankers fee on the collector, not the debtor. Which would be a nice change of pace. The amendment to LB 327 would also explain why the collectors association is on the anti-LB 327 bandwagon.

 

It looks like the bill had its hearing way back in March 2015, and is advanced to the general file, but nothing else has happened with it. I suspect that with a short legislative session going on right now, this bill may not be attended to in the current legislative session.

 

At this point, I’m guesstimating that the bill is meant to take money out of collectors’ pockets each time they serve a garnishment on a bank. My other question is, how does a “financial institution” become “authorized” to charge a garnishment fee (as indicated in the language of the amendment I cited earlier in this article)? Some sort of vetting process or application process? Or by some other definition embedded in the banking laws?

 

It’s certainly worth monitoring, because what person, who’s already having debt problems, wants to pay (or can afford to pay) additional banking fees?