Bankr SD Fla: Debtor May Claim Head of Family Exemption to Garnishment Notwithstanding her Failure to Claim Exemption in State Court Action

Bankr SD Fla: Debtor May Claim Head of Family Exemption to Garnishment Notwithstanding her Failure to Claim Exemption in State Court Action

This matter came before the Court upon the Objection to Debtor’s Claim of Exemption by Creditor Midland Credit Management, Inc., as Agent for Midland Funding, LLC (the “Objection”) (ECF #28).1 Midland Funding LLC (the “Creditor”) argues that the Debtor permanently waived her right to a head of family exemption (the “Exemption”) by failing to assert the exemption in an underlying state court action (the “State Court Action”) or seeking to dissolve the writ of garnishment issued by the state court in the subsequent garnishment proceeding (the “Garnishment Proceeding”).

At issue is whether a Debtor can waive her Exemption by failing to follow the procedural instructions outlined in Fla. Stat. §77.041. I hold that the failure to follow procedural instructions in Fla. Stat. §77.041 does not constitute an absolute waiver of the Exemption.

The Debtor is the head of her household  and has two dependent daughters. The Debtor’s current monthly income is $3,205.63. Debtor filed her voluntary chapter 13 petition on November 11, 2016.

Prior to filing her voluntary petition, the Debtor was involved in the State Court Action brought by the Creditor to recover past due credit card payments. The State Court Action was resolved in favor of the Creditor and a final judgment in the amount of $7,010.69 (the “Final Judgment”) was entered against the Debtor. Originally, the Debtor and the Creditor had a $50 per month payment plan to repay the Final Judgment; however, the Debtor defaulted on those payments. After the Debtor defaulted on the payment plan, the Creditor returned to state court and initiated the Garnishment Proceeding to collect the remainder of the Final Judgment. A writ of garnishment was issued by the clerk of the state court on January 28, 2016.

The Debtor was served with a copy of the writ of garnishment and the notice required by Fla. Stat. §77.041. The notice advised the Debtor about her right to claim exemptions and explained the procedure to obtain relief from the Garnishment Proceeding.3 The Debtor states she sent a form claiming the Exemption and requesting a hearing to the Creditor. However, the Debtor never formally asserted the Exemption in the Garnishment Proceeding. A default final garnishment judgment was entered in the Garnishment Proceeding (the “Garnishment Judgment”). From May 31, 2016, to the petition date, the Creditor received a total of $5,240.15 in garnished funds. After the Debtor filed her petition, the Creditor voluntarily dissolved the writ of garnishment.


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