Miami Bankruptcy Lawyer - Florida Exemption of "Earnings"

Bankruptcy Lawyer - Chapter 13 Bankruptcy Lawyer Jordan E. Bublick has an office in Miami and has over 25 years of experience in filing chapter 13 and chapter 7 bankruptcy cases. His office is located in Miami at 1221 Brickell Ave., 9th Fl., Miami and may be reached at (305) 891-4055. www.bublicklaw.com  

Florida statutes section 222.11 provides for certain exemptions of "disposable earnings" of a head of family and non-head of family in three different situations as follows:

• All of the disposable earnings of a head of a family of $500.00 or less a week are exempt.
• Disposable earnings of a head of family greater than $500.00 are exempt unless the person has agreed otherwise in writing (also cannot exceed 15 USC 1673)
• Disposable earnings of a person that is not a head of family is exempt to the extent of 15 USC 1673

The case of Brock v. Westport Recovery Corp., 832 So. 2d 209 (Fla. 4th DCA 2002), the court found that the judgment debtor’s income from his own family's corporate business did not constitute exempt “earnings” within the meaning of §222.11(1)(a), Florida Statutes (2001). The issue presented to the court was whether his income constituted “earnings” which the statute defines as including “compensation, paid or payable, in money of a sum certain, for personal services or labor whether denominated as wages, salary, commission, or bonus.” § 222.11 (1)(a), Florida Statutes (2001). The court stated that in order to determine whether monies derived from employment qualified as “earnings”, the “relevant inquiry is often whether a person’s employment is a salaried job or is in the nature of running a business.” Brock, 832 So. 2d at 210. 

The court noted that the court in In re Manning, 163 B.R. 380 (Bankr. S.D. Fla. 1994) held that a debtor who owns or controls a business cannot exempt the funds he distributes to himself from the business simply by calling the money ‘wages.’” Id. at 382. In Manning, the debtor owned 100% of the stock in the corporation, he was the corporation’s president, he had no written employment contract, and he established his own salarly, commissions, and bonuses. The court held that the debtor’s income was not exempt “earnings” as the income constituted discretionary distributions from the family owned business. Although the debtor performed personal services, he did not receive regular compensation pursuant to the terms of an arms-length employment agreement. Id., See also In re Harrison, 216 B.R. 451, 454 (Bankr. S.D. Fla. 1997). The court also noted the case of In re Zamora, 187 B.R. 783 (Bankr. S.D. Fla. 1995) where the court concluded that an attorney’s compensation from his own law practice did not qualify as exempt “earnings” as the debtor’s activities were not essentially a job but were in the nature of running a business. Id. at 785.

The court held that the judgment debtor’s income did not constitute exempt "earnings". The debtor ran his own business, had control over the timing and the amount of his compensation, and did not have a formal employment agreement. The court noted that the legislature did not intend to exempt all funds a person “draws” from a business.

Although the judgment debtor’s income did not constitute exempt “earnings”, the court held that they were not reachable at least by a continuing writ of garnishment pursuant to §77.0305 as the income did not constitute a “salary” or “wages” as required by the statute. The court noted that “salary” or “wages” under §77.0305 falls within §222.11(1)(a)’s definition of “earnings”. A continuing writ of garnishment is not available to garnish draws, expense reimbursements, and capital account disbursement. See Cadle Co. v. G & G Assocs., 737 So. 2d 1136, 1140-41 (Fla. 4th DCA 1999).Jordan E. Bublick is a Miami Personal Bankruptcy Lawyer with over 25 years of experience in filing chapter 13 and chapter 7 bankruptcies. Miami Personal Bankruptcy Lawyer Jordan E. Bublick has filed over 8,000 chapter 13 and chapter 7 cases.