Low-Income Alabamians Protected from Wage Garnishments
Creditors can’t garnish the wages of low-income Alabamians if they are earning less than $1,000 per paycheck and that money is being spent on living expenses, the Alabama Court of Civil Appeals recently ruled in a case brought by the Southern Poverty Law Center (SPLC) and Legal Services Alabama (LSA) on behalf of two women who would have been unable to support their families if a creditor had garnished their wages.
“This ruling is a victory that will ensure all Alabamians have the opportunity to meet basic living expenses before creditors start taking money out of their paychecks,” said Sam Brooke, SPLC deputy legal director. “It supports a longstanding provision of the Alabama Constitution designed to protect people from creditors as they struggle to meet their most fundamental needs.”
A copy of the ruling, which was issued last week, can be viewed at: https://www.splcenter.org/sites/default/files/ejp_garnishmentappeal.pdf.
The women at the center of the case faced wage garnishment of 25 percent per paycheck for falling behind on payments for predatory car loans – despite earning about $500 per pay period. The ruling overturns a lower court’s finding that the Alabama Constitution only protects the first $1,000 earned in total wages, leaving subsequent paychecks fair game for garnishment.
The lower court’s ruling meant that someone earning $500 per paycheck would only have two paychecks protected from garnishment. Every subsequent paycheck would be garnished until the creditor was paid off – regardless of how little money the person earned per check. The latest ruling by the appellate court protects every paycheck under $1,000 from garnishment as long as that money is going toward living expenses.
The women – Samantha Nettles and Lenita Merrida – had fallen behind on their payments to Credit Acceptance Corporation, a company that finances high-interest loans for used cars. They were sued by the company for thousands of dollars in missed payments, interest and court costs.
During that time, Nettles was earning $424 per pay period while supporting two children. She was also expecting her third child. Merrida, who averaged $500 per pay period, was the sole source of support for her young grandchild. When the women couldn’t fulfill the court judgment against them, the circuit court allowed the company to garnish their wages.
In 2016, Legal Services Alabama claimed on behalf of the women that wages of less than $1,000 per paycheck were protected from garnishment under the state constitution. After the circuit court ruled against the women, the SPLC and LSA appealed the decision.
“Low wage Alabamians have property rights too,” said Artur Davis, executive director of LSA “In addition to this broad victory for working class people, a single mother and a grandmother raising her grandchild both have a fighting chance to feed their families now.”