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COMMITTE AMENDMENT ADOPTED
February 3, 2000
S. 354
S. Printed 2/3/00--S.
Read the first time January 19, 1999.
TO AMEND TITLE 15, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO CIVIL REMEDIES AND PROCEDURES, BY ADDING CHAPTER 42 SO AS TO ENACT THE "SOUTH CAROLINA BUSINESS DEBT RECOVERY ACT OF 1999", WHICH PROVIDES PROCEDURES THAT GRANT TO PERSONS WHO HAVE RECOVERED JUDGMENTS AGAINST ANOTHER PERSON FOR A COMMERCIAL DEBT A RIGHT TO A WRIT OF GARNISHMENT, SUBJECTING TO GARNISHMENT UP TO SPECIFIED LIMITATIONS INCOME, WAGES, INTEREST, RENTS, DIVIDENDS, CAPITAL GAINS, BONUSES, AND COMMISSIONS OF THE DEBTOR; AND TO AMEND SECTION 37-5-104, RELATING TO THE PROHIBITION AGAINST GARNISHMENT FOR CERTAIN CONSUMER DEBTS, SO AS TO PERMIT GARNISHMENT FOR COMMERCIAL DEBTS AS DEFINED IN CHAPTER 42 OF TITLE 15 ABOVE.
Amend Title To Conform
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Title 15 of the 1976 Code is amended by adding:
Section 15-42-10. This chapter may be cited as the 'South Carolina Business Debt Recovery Act of 2000'.
Section 15-42-20. (A) Every person who has recovered judgment in a court against another person to recover a 'commercial debt' as defined in this chapter has a right to a writ of garnishment, in the manner provided in this chapter, to satisfy the judgment he has obtained by subjecting to garnishment income, wages, interest, rents, capital gains, dividend bonuses, and commissions of the judgment debtor. Except for the above types of income, no other types of personal property of the debtor are subject to garnishment, and the term 'property' of the debtor or any other similar term, as used in this chapter in regard to garnishment, must be construed in the manner provided in this section.
(B) The term 'commercial debt' as used in this chapter means a nonconsumer debtor or a debt which resulted from a revolving credit account which is not a consumer credit transaction as defined in Section 37-1-301(11) or other debt of a consumer as defined in Section 37-1-301(10). A commercial debt, for purposes of this chapter, does not include a first mortgage on a residence which qualifies as a person's legal residence under Section 12-43-220(c).
(C) Child support payments are not income subject to garnishment under this chapter. However, garnishment of income for required child support payments otherwise provided for by the laws of this State or under federal law continues in full force and effect and is not affected by the provisions of this chapter.
(D) A writ of garnishment must not be issued subject to an obligation to garnish a person paying income to the debtor as a tenant, client, or customer of the debtor.
(E) For a commercial debt as defined in subsection (B) to be subject to other provisions of this chapter, the debtor and the creditor before entering into the transaction must first voluntarily and knowingly agree in writing that the transaction constitutes a commercial debt for this purpose.
Section 15-42-30. (A) After judgment has been obtained against a defendant, the judgment creditor shall serve notice of intent to apply for a writ of garnishment on the debtor. The judgment creditor also shall serve with the notice an affidavit of search stating the amount of the judgment and that the plaintiff has searched for and was unable to find property on which a levy may be made sufficient to satisfy the judgment. The affidavit of search may be filed and the writ issued either before or after the return of execution. The notice shall give the judgment debtor thirty days to respond, which response must be in writing and served upon the judgment creditor.
(B) The notice must be in writing and conspicuously state: the name, address, and telephone number of the judgment creditor to whom the garnished payments must be made, a brief identification of the debt and a statement that, if the debt is not paid, the judgment creditor may apply for a writ of garnishment, the debtor's right to cure the debt, and the amount of payment and date by which payment must be made to cure the debt before garnishment. A notice shall be in substantially the following form:
Section 15-42-40. (A) Thirty days after service of the notice, the judgment creditor may file with the circuit court the original notice, affidavit of search, affidavit of service, a response, and a motion for writ of garnishment together with a filing fee of twenty-five dollars.
If the judgment debtor serves an answer to the notice, the court shall set the motion for hearing and notify all parties of the hearing.
(B) If the judgment debtor fails to answer as required, the judgment creditor shall file with the circuit court, the original notice, affidavit of search, affidavit of service, affidavit of default, and a motion for writ of garnishment. If the judgment debtor fails to answer, the court shall issue a writ of garnishment against the judgment debtor, for the amount of the judgment.
(C) Upon receipt of the writ of garnishment, the judgment creditor shall forward a copy to the employer or other garnishee of the judgment debtor, which writ shall provide for the periodic payments of a stated portion of the salary or wages of the judgment debtor as provided in Section 15-42-50. The judgment creditor also shall forward to the employer or other garnishee instructions for the manner in which the remittance by the employer or other garnishee to the judgment creditor must be made, the content of which must be prescribed by court rule.
(D) Until the judgment is satisfied or until otherwise provided by court order, the court shall allow the judgment debtor's employer and subsequent employers or other garnishee to collect up to five dollars against the salary or wages of the judgment debtor to reimburse the employer or other garnishee for administrative costs for the first deduction from the judgment debtor's salary or wages and up to one dollar for each deduction thereafter.
(E) The employer or other garnishee shall remit the funds withheld to the judgment creditor within fifteen days after withholding. An employer or other garnishee who wilfully violates the requirements of this chapter in regard to the garnishment and remittance of an employee's earnings or other garnishable income to a judgment creditor is subject to a civil penalty of two hundred fifty dollars for each violation to be imposed at the discretion of the court. The creditor has a right of action against the employer for any garnished wages not remitted, to include the recovery of reasonable attorney's fees and costs.
(F) The employee must be fully credited with payment toward the debt in the amount garnished even if those funds are not remitted to the creditor by the employer or other garnishee.
Section 15-42-50. (A) As used in this chapter:
(1) 'Disposable earnings' means that part of the earnings of an individual remaining after the deduction from those earnings of the amount required by law to be withheld.
(2) 'Earnings' means compensation paid or payable for personal service, whether denominated as wages, salary, commission, bonus, or otherwise.
(B) Notwithstanding subsection (A) of this section, the maximum part of the aggregate disposable earnings of an individual for any workweek which is subject to garnishment may not exceed twenty-five percent of his disposable earnings for that week.
(C) The limitation of garnishment set forth in subsection (B) shall apply although the garnishee may receive a writ of garnishment in more than one garnishment case naming the same defendant. No garnishee shall withhold from the disposable earnings of the defendant any sum greater than the amount prescribed by subsection (B), as applicable, regardless of the number of writs. Valid prior recorded writs of garnishment shall have priority over valid writs of garnishment subsequently recorded..
(D) The administrative costs as detailed in Section 15-42-40(D) count when computing the maximum amount of disposable earnings subject to garnishment.
Section 15-42-55. Within twenty days of full payment of the amount owed, the judgment creditor shall file a satisfaction of judgment with the clerk of court in each county where the judgment was filed. A judgment creditor who fails to file a satisfaction of judgment pursuant to this section is subject to a penalty of fifty dollars payable to the clerk of court.
Section 15-42-60. No employer may discharge or terminate any employee by reason of the fact that his earnings have been subjected to garnishment, even though more than one writ of garnishment may be served upon the employer with respect to the indebtedness. An employee discharged or terminated in violation of this section may bring a civil action for wrongful discharge or termination.
Section 15-42-70. Funds or benefits from a pension or retirement program or funds or benefits from an individual retirement account are exempt from the process of garnishment until paid or otherwise transferred to a member or beneficiary of the program. The funds or benefits, when paid or otherwise transferred to the member or beneficiary, are exempt from the process of garnishment only to the extent provided in Section 15-42-50 for other disposable earnings, unless a greater exemption is otherwise provided by law.
Section 15-42-80. The remedy provided by this chapter is not exclusive but is in addition to any other collection procedures provided by the laws of this State in effect at the time this chapter takes effect and is optional with the judgment creditor.
Section 15-42-90. This chapter does not apply to garnishment for income tax purposes or other purposes which are otherwise provided for by the laws of this State."
SECTION 2. Section 37-5-104 of the 1976 Code is amended to read:
"Section 37-5-104. With respect to a debt arising from a consumer credit sale, a consumer lease, a consumer loan, or a consumer rental-purchase agreement, regardless of where made, except those transactions which are deemed to be commercial debts as defined in Chapter 42 of Title 15, the creditor may not attach unpaid earnings of the debtor by garnishment or like proceedings."
SECTION 3. Chapter 39, Title 15 of the 1976 Code is amended to read:
"Section 15-39-410. The judge may order any property of the judgment debtor, not exempt from execution, in the hands either of himself or any other person or due to the judgment debtor, to be applied toward the satisfaction of the judgment, except that the earnings of the debtor for his personal services cannot be so applied."
SECTION 4. This act takes effect upon approval by the Governor.
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