The following article appeared in the April 2018 Addendum published by the Alabama State Bar.
By J. Gabriel Carpenter
There are, or used to be, state constitutional and statutory exemptions applicable to the garnishment of wages. Judgment debtors used to be able to combine the two. Then there was a choice between the two. Now, you get what you get and don’t pitch a fit.
Alabama’s Constitution provides that “[t]he personal property of any resident of this state to the value of one thousand dollars, to be selected by such resident, shall be exempt from sale or execution, or other process of any court, issued for the collection of any debt contracted ….” The Alabama Code, on the other hand, basically allows debtors to exempt 75 percent of their wages.
For a couple of decades, the Code has limited its interaction with the Constitution. Section 6-10-37 provides: “No claim for exemptions shall exceed the greater of the amounts authorized by the Constitution of 1901, as amended, or required by provisions of federal law.” With the insertion of § 6-10-6.1 in 2015, the Code seems to have cut ties entirely. That section “exclude[s] from the meaning of personal property the wages, salaries, or other compensation of a resident for the purposes of the personal property exemption under Section 6-10-6 and Section 204 of the Constitution of Alabama of 1901.”
After the amendments to § 6-10-6 and § 6-10-37 in 1988, Courts concluded that a debtor couldn’t stack his constitutional exemption on top of his statutory exemption—at least where doing so would allow more exemption than the statute or Constitution would on its own. Usually, a debtor gets either or, but not both. Say a debtor gets $1,334 in wages. It would be slightly better to use the 75-percent statutory exemption of $1,000.50 rather than the Constitution’s cool $ 1,000. This debtor couldn’t stack the $1,000 constitutional exemption and claim all wages exempt without running afoul of § 6-10-37. Of course, if his wages were below $1,000, the Constitution would allow the debtor to exempt the whole amount.
But how often can you claim the constitutional exemption? Say I received $999 per day in wages. Could I claim all that exempt each pay period? Creditors would cringe. Or is this a one-time deal? One recent case seemed to say it is, but that didn’t seem right either. The Court of Civil Appeals provided some clarification recently in the cases of Merrida and Nettles v. Credit Acceptance Corporation. It held that a judgment debtor could claim the full $1,000 exemption each pay period, so long as she was able to show that the money is used to support her family and there is no accumulation of wages over $1,000.
This is good news for a single parent bringing home $600 every two weeks. But does it matter? The debtors in Merrida were allowed their constitutional exemption only because their debts were incurred prior to June 11, 2015. Thus, the Court did not have to deal with § 6-10-6.1. It seemed clear that wages could be exempt as personal property under the Constitution. But the Legislature apparently disagreed and used § 6-10-6.1 to rewrite the Constitution.
So what happens to debts incurred after the effective date of § 6-10-6.1? Will the courts rubber-stamp this legislative impudence and deny low-income Alabamians their constitutional exemption? Or will they insist that such a change wend its way through the proper channels?
Article X, § 204, ALA. CONST. (1901).
ALA. CODE (1975) § 6-10-6; § 6-10-7; and § 5-19-15.
ALA. CODE (1975) § 6-10-6.1 (emphasis added). This section was inserted into Act 2015-484, which increased the personal property and homestead exemptions in Alabama. It wasn’t in the bill that was first introduced.
Compare Roberts v. Carraway Methodist Medical Center, 591 So.2d 870, 872 (Ala. Civ. App. 1991) (stacking permitted where debtor exempted $430—$107.50 under the Constitution and $322.50 (75 percent of wages) under the statute) with Sink v. Advanced Collection, 607 So.2d 246 (Ala. Civ. App. 1992) (stacking prohibited where debtor claimed $1,200 in wages exempt—$900 under the statutes and $300 under the Constitution).
Alabama Telco v. Gibbons, 195 So.3d 1012 (Ala. Civ. App. 2015). The Gibbons Court was trying to make clear that any accumulation of wages above $1,000 is not exempt, but unfortunately, it confused the matter by also stating that the Constitution “does not allow for the application of a reoccurring $1,000 exemption for a claimant’s wages earned during each pay period in perpetuity.” Id. at 1018.
__ So.3d __, Case Nos. 2160188 and 2160189 at *8-9 (Ala. Civ. App. May 12, 2017) (citing Walker v. Williams & Bouler Construction Co., 241 So. 2d 896, 900 (Ala. Civ. App. 1970) (quoting Weis v. Levy, 69 Ala. 209, 211 (1881)).
Id. at *6.
See Roberts, 591 So.2d at 871.
What do they mean by “incurred?” Is it when the debt was contracted for? Or is it when the debt is reduced to judgment? The Code uses the word “created,” but that is no more helpful. ALA. CODE § 6-10-1.
J. Gabriel “Gabe” Carpenter has been practicing in Talladega since the fall of 2010. At Alabama Consumer Law Group, LLC his practice focuses on civil litigation in the state and federal courts, particularly matters involving violations of consumer protection laws such as the Truth in Lending Act and the Fair Debt Collection Practices Act. In addition, he is primarily responsible for the firm’s wills and estates practice.