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California Debtor’s Rights – Claims Of Exemption (COE)

illustrated hand reaching out of laptop to grab money

Even if someone you owe money to has gone to court and got a judgment ordering you to pay a certain amount, the court that issued the judgment doesn’t force you to pay it immediately. But, once the person or company has a money judgment that says you owe the money (plus any added interest, collection costs, and attorney’s fees that the court ordered to be included in the judgment), there are some powerful tools they can use to get money from you.

A judgment creditor can file documents to force your bank to give them money out of your account, called a bank levy. Or they can require your employer to take money out of your paycheck to pay them some of what is due under the judgment, called an Earnings Withholding Order. Still, though, you have legal rights to protect some of the money that you need to survive, and so there is a process called a Claim of Exemption (COE) that allows you to ask the court to let you keep all or part of your money.

When You Need A Claim Of Exemption

A powerful tool a judgment creditor might use to get money from you to pay a court judgment is wage garnishment. The law calls this process an Earnings Withholding Order (EWO), and if the creditor follows all the legal steps correctly, it will force your employer to take money out of your earnings to pay it to the creditor. Similar to deductions for taxes and other things that are removed from your earnings before you get your paycheck, an EWO directs your company to calculate the maximum amount that can be deducted from each pay period to send that money to the county sheriff or other official, called the levying officer, who will send the money to the creditor to pay down the amount of the judgment.

When you get a notice that there is an EWO in place, you have an opportunity to object. You can’t dispute the original judgment that ordered you to pay money to the creditor, usually, but you can contest the amount they plan to take from each paycheck. (If the money judgment came by a default judgment because you didn’t go to court to contest the original debt, there is a chance that you can reopen the case to dispute the debt). This is a complicated process. A skilled debtor’s rights attorney can help you understand your case in more detail and understand what rights you may be able to assert to protect your funds.

Generally, a valid EWO will result in your employer deducting a set amount from each paycheck until the judgment is paid in full. If the money judgment is valid and there is no way to challenge it, your attorney can still guide you through the process of filing a Claim of Exemption if the amount the creditor plans to take from each paycheck is too much or violates your rights in some way. An adequately filed COE might protect some of your earnings from being withheld by showing the court you meet some legal exemptions to the proposed deduction. There are a few cases, though, where a COE can’t help you protect your money from being taken, such as when:

  • Some of your income is used for luxuries that aren’t essential to support you and your family
  • You owe money due to a court order that came from a family law case
  • You owe money for past due child support or spousal/partner support
  • The debt is to a former employee of yours who didn’t get fully paid for their work

How A Claim Of Exemption Works

Suppose you can prove that some, or all, of the money the judgment creditor plans to take from your earnings is more than the legal limits of what is allowed to be deducted. In that case, you may have a valid Claim of Exemption as long as you give notice in the time required and follow all the legal steps to convince the court of your claim. An experienced California debtor’s rights attorney can be a powerful ally to help you follow all the steps properly to protect your money as allowed by law.

You will get a copy of the Earnings Withholding Order from your employer explaining the amount deducted from each paycheck. You have a limited time, 15 days to file a COE and put the garnishment process on hold while you assert your rights to hold on to some of your money that the creditor plans to take from your earnings. With your lawyer’s help, you will need to show, on a Financial Statement form that the court accepts, that you need some or all of the money to be deducted from your pay to support yourself and your family.

You can make an offer on your COE form to have the creditor take a certain amount from each paycheck. Your attorney can help you understand if this is a good option for you, and it may resolve the dispute without having to go back to court to argue over your claim of exemption. Even after you’ve filed the COE with the levying officer (the county sheriff, usually), your employer is required to keep deducting the money and sending it to the levying officer until the court rules that it should change. While working through the exemption process, the levying officer will hold onto the money until the court decides whether you should get some or all of it back or if it should go to the creditor.

Get Legal Advice Today

You have legal rights to protect some of your hard-earned money, even if a court has issued a money judgment that says you have to pay a creditor. A knowledgeable debtor’s rights attorney will help you understand your rights and make your claim of exemption to hold onto some of your money to be sure that you can take care of necessities of life like rent, food, transportation, and other vital necessities. Reach out for advice from the skilled debtor’s rights attorneys at Fitzgerald & Campbell, APLC by calling 844-431-3851 or visiting us online today for a free consultation to understand your rights and protect your assets.

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