Updates to Oklahoma Garnishment Statutes Take Effect November 1, 2016

Updates to Oklahoma Garni…

The Oklahoma legislature recently amended the garnishment statutes set forth in 12 O.S. § 1171 and 12 O.S. § 1190.  These changes will take effect on November 1, 2016. 

The most noteworthy change is to general garnishments under 12 O.S. § 1173.3 to federally insured depository institutions (i.e. banks).  When issuing a general garnishment to a bank, a judgment creditor is now required to remit a $25.00 fee to the bank to cover the costs incurred in answering the garnishment.  This $25.00 fee must be delivered to the bank at the same time the garnishment summons is served. 12 O.S. § 1190(A)(2).  This change applies only to general garnishments issued under 12 O.S. § 1173.3, and does not apply to garnishments for income assignments, non-continuing earnings, child support, or continuing earnings.  The new fee structure raises several unanswered questions that banks may encounter, including whether a bank may refuse to honor a general garnishment if the $25.00 fee is not tendered.  Please contact us for further advice regarding a bank’s rights and obligations under the updated statutes.

While the legislature made other changes to clarify the language set forth in the garnishment statutes, they did not substantively alter the statutes themselves or the fee applicable to all other non-bank garnishments.  The garnishment statutes allow a non-bank garnishee to collect a $10.00 fee from the judgment debtor’s funds as reimbursement for costs incurred in answering the garnishment.  In the event the garnishee is not actually indebted to the judgment debtor, the garnishee is permitted to collect the $10.00 fee directly from the judgment creditor.  While the legislature did not alter this fee structure, the amendments did clarify that any fee may be taxed and collected as costs. 12 O.S. § 1190(A)(1).

Finally, the legislature added a “good faith” requirement to the creditor’s ability to maintain garnishments actions.  Now, creditors can only pursue garnishments from any person “whom the creditor, in good faith, believes to be indebted to the creditor’s debtor.” 12 O.S. § 1171(A).  Previously, there was no such “good faith” requirement.  Instead, creditors were entitled to proceed with garnishments against any person “who shall” be indebted to the creditor’s debtor.  At this time, it is unclear how this “good faith” requirement will be interpreted by the courts.

If you have questions about these updates to the garnishment statues or for more information about our Banking and Finance practice area please contact us.

Categories: Articles, Banking Law

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