THE SENATE	S.B. NO.	3215
THIRTY-FIRST LEGISLATURE, 2022
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO GARNISHMENT.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that wage garnishment occurs when a court orders an employer to withhold a specified percentage of an employee's paycheck for payment of a debt. According to a November 2020 report from the National Consumer Law Center, nearly three per cent of individuals in the national workforce had their paychecks garnished for consumer debt, which includes student loans and medical debt. Some states, such as North Carolina, Pennsylvania, South Carolina, and Texas, have prohibited wage garnishment altogether for consumer debt. Ten states and the District of Columbia have either suspended wage garnishment or blocked new wage garnishments during the coronavirus disease 2019 pandemic. Current federal law protects seventy-five per cent of an employee's disposable income, or an amount equal to thirty times the federal minimum wage, whichever is greater, from wage garnishment. Disposable income is the amount of earnings left after legally required deductions, including taxes, social security, medicare, and unemployment insurance, are made on an employee's income. Most states have a higher exemption rate than the federal rate for an employee's disposable income, and some of those states base their exemptions on on a sliding scale.

The legislature further finds that Hawaii law exempts from wage garnishment a portion of the defendant's income remaining after the deduction of any amounts required by law to be withheld by withholding an amount to be determined as follows: five per cent of the first $100 per month, ten per cent of the next $100 per month, and twenty per cent of all sums in excess of $200 per month. The legislature also finds that these exemptions do not sufficiently protect consumers, as Hawaii's cost of living is among the highest in the nation. Individuals subject to garnishment may struggle to pay for basic needs, including medical insurance, healthcare, housing, food, and transportation. These basic needs are not taken into consideration in garnishment calculations. Many individuals subject to garnishment may have to file for bankruptcy, become homeless, experience other negative financial outcomes, or become a burden on the State's social services. It is therefore imperative for the State to significantly reduce the financial harms imposed on individuals and families subject to existing garnishment law.

Accordingly, the purpose of this Act is to authorize cost of living expenses, as determined by the self-sufficiency standard for the State, to be protected from certain garnishments.

SECTION 2. Section 652-1, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Before judgment. When any goods or effects of a debtor are in the possession of an attorney, agent, factor, or trustee (in this chapter jointly and severally included in the term "garnishee"), or when any debt is due from any person (also included under the term "garnishee") to a debtor, or when any person has in the person's possession for safekeeping any moneys of the debtor, any creditor may bring the creditor's action against the debtor and in the creditor's petition for process, or by amendments of the complaint at any time before judgment, after meeting the requirements of section 652-1.5, may request the court to insert in the process a direction that service of a true and attested copy thereof be made upon the garnishee[[],[]] in any of the manners described under section 652-2.5[[],[]] and to summon the garnishee to appear personally upon the day or term appointed in the process for hearing the action or at any other time appointed by the court and then and there on oath to answer all of the following inquiries, herein inclusively referred to as the "disclosure":

[(1) Whether] whether at the time the copy was served on the garnishee, the garnishee had any of the goods or effects of the defendant in the garnishee's hands and, if so, the nature, amount and value thereof;

[(2) Whether] whether at the time of service, the garnishee was indebted to the defendant and, if so, the nature and amount of the debt; or

[(3) Whether] whether at the time of service on the garnishee, the garnishee had any moneys of the defendant in the garnishee's possession for safekeeping and, if so, the amount thereof.

The summons and direction shall be signed and issued as is usual in other civil process after proceedings under section 652-1.5. The summons shall specify an amount or value of money, debt or goods or effects to be garnished [which] that shall not exceed one hundred twenty per cent of the amount of the plaintiff's claim, including cost and interest. The summons shall be served upon the garnishee in any of the manners described under section 652-2.5. From the time of service, the garnishee shall secure in the garnishee's hands to pay [such] the judgment [as] the plaintiff [shall recover] recovers in the action, [such] any of the following property or choses then in the garnishee's possession or owing to the defendant as shall equal the amount or value specified in the summons, except what the court has expressly found to be exempt from execution pursuant to section 652-1.5(d) or (f):

(1) The goods and effects of the defendant then in the hands of the garnishee;

(2) Any debt then owing from the garnishee to the defendant;

(3) Moneys of the defendant then in the possession of the garnishee for safekeeping[;], after the cost of living exemption, as described in paragraph (4); and

(4) A portion of the defendant's wages, salary, stipend, commissions, annuity, or net income under a trust (in this chapter included under the term "wages"), remaining after the deduction of any amounts required by law to be withheld and a cost of living exemption, which shall be equal to the most recent self‑sufficiency standard for Hawaii for a one-person household, as determined by the department of business, economic development, and tourism pursuant to section 201-3(a)(5), by withholding the amount to be determined as follows: five per cent of the first $100 per month, ten per cent of the next $100 per month, and twenty per cent of all sums in excess of $200 per month, or an equivalent portion of the above amount per week, whether then or thereafter to become owing[.]; provided that the cost of living exemption may be proactively increased upon a showing by the defendant that dependents or other factors affect a high cost of living, including expenses specific to maintaining the defendant's place of residence; provided further that, if the most recent self‑sufficiency standard for the State has not been updated for at least five years, the cost of living exemption shall be adjusted in accordance with the most recent Honolulu region consumer price index.

The property or choses described in (1), (2), (3), and (4) of this paragraph are included under the term "garnishee fund" (in this chapter). The cumulative total value of the fund, in advance of final judgment, shall be no more than the amount specified in the summons.

Except as provided in section 652-1.5, the summons and direction shall be sufficient notice to the defendant to enable the plaintiff to bring the plaintiff's action to trial, unless the defendant is an inhabitant of the State or has some time resided therein, in which case a like copy shall be served personally upon the defendant or left at the defendant's last and usual place of abode.

The court shall order the garnishee fund released at the hearing provided in section 652-1.5 or thereafter upon the filing by the debtor with the court of a bond or bonds issued by a surety or sureties licensed to do business [as such] in the State, in an amount sufficient to pay the claim of the creditor together with costs and interest, and conditioned upon judgment rendered in favor of the creditor and to the extent the claim or any portion thereof, together with costs and interests, if any, is awarded."

SECTION 3. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval.

INTRODUCED BY:

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Report Title:

Garnishment; Moneys; Cost of Living Exemption

Description:

Authorizes cost of living expenses, as determined by the self‑sufficiency standard for the State, to be protected from certain garnishments.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.