Can Creditors Garnish the Self-Employed?

When creditors are unable to collect a past-due debt, they have a right to file a lawsuit and obtain an order of garnishment to take money from a debtor's bank account or his paycheck. It may not be easy to garnish wages of a self-employed debtor, as he does not receive a regular paycheck from his business.

Garnishing the Cash Register

When a creditor receives a writ of garnishment from the court, he has a right to collect the money a self-employed debtor has at any given moment. A sheriff can take the money from a debtor's cash register. If his business doesn't have a cash register, a sheriff can take any money a debtor has with him or in his office at that time. A creditor may do that as many times as necessary until the debt is repaid or the debtor negotiates a repayment plan.

Attachment on Tools of Trade

A creditor can file a writ of execution or attachment on the tools of a self-employed debtor. Plumbers or carpenters use a variety of tools in their trade. With a court's permission, a creditor can seize the tools, sell them at auction and use the proceeds to pay down the debt. A creditor can also seize and sell a debtor's vehicle if he uses it for business. It is unlikely that a creditor can get enough money from a tool sale to cover a substantial part of a debt balance. This is often a step to encourage a debtor to negotiate a repayment plan.

Garnishing Bank Accounts

A creditor may garnish a debtor's individual or business bank accounts. By obtaining a writ of garnishment from the court, a creditor receives permission to collect the funds in a debtor's account. Upon receiving garnishment documents and verifying the account ownership, a bank mails the funds from a debtor's account to the creditor. If a debtor's spouse is a joint account holder and is not a party in the lawsuit, a debtor can file an exemption claim on the spouse's funds. However, in community-property states a debtor's spouse may also be responsible for debt repayment when debts are incurred during marriage.

Garnishing Accounts Receivable

A self-employed debtor may not always receive a payment upon completion of his work. He keeps track of pending payments in accounts receivable. The court can order that a debtor provide information about the outstanding payments in accounts receivable. Per the creditor's petition to garnish accounts receivable, the court can order the debtor's customers to mail payments directly to the court clerk. The court mails the funds to the creditor.