HOUSE OF REPRESENTATIVES
THIRTY-FIRST LEGISLATURE, 2021
STATE OF HAWAII
A BILL FOR AN ACT
relating to wage garnishment.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that wage garnishment is a legal procedure where the court orders an employer to withhold a specified percentage of an employee's paycheck for repayment of debt. Some states, such as North Carolina, Pennsylvania, South Carolina, and Texas, have prohibited wage garnishment for consumer debt, while ten states and the District of Columbia have either suspended wage garnishment or blocked new wage garnishments during the COVID-19 pandemic. However, laws on wage garnishment in Hawaii continue to allow creditors to garnish five per cent of the first $100 in disposable income per month, ten per cent of the next $100 per month, and twenty per cent of all sums in excess of $200 per month. Because state and federal laws provide two different metrics for the calculation of garnished wages, the employer must use the calculation that is most financially advantageous for the employee, which, in most cases in the State, results in wage garnishment being calculated under state law.
The legislature further finds that due to the high cost of living in Hawaii, individuals subject to wage garnishment may struggle financially to pay for necessary expenses, such as housing, food, and transportation. Therefore, by calculating disposable earnings as the amount of earnings left after legally required deductions and cost of living expenses, it may prevent persons subject to wage garnishment from having to file for bankruptcy and experiencing other negative financial outcomes.
The purpose of this Act is to allow cost of living expenses to be included in the calculation when determining disposable earnings as it relates to wage garnishment.
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 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 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 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 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 judgment as the plaintiff shall recover in the action, such 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; 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 by the defendant showing dependents
or other factors affecting a high cost of living, such as expenses specific to maintaining
the defendant's employability or professional credentials; provided further that
if the most recent self-sufficiency standard for Hawaii 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.
Wage Garnishment; Disposable Earnings; Cost of Living Exemption
Allows cost of living expenses, as determined by the self-sufficiency standard for Hawaii, to be included in the calculation when determining disposable earnings as it relates to wage garnishment.
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.