What Is a Forced Payment Called? From Levies to Garnishments

A forced payment is a financial obligation compelled through legal means or official action. They arise from court judgments, governmental mandates, or private creditor recovery efforts. Different terms are used to describe these compelled payments, depending on the entity initiating the collection and the specific legal framework involved. Understanding these distinctions is important for comprehending how such payments are enforced.

Payments Mandated by Court Order

Payments compelled directly by a court ruling or judgment are a significant category of forced financial obligations. These mandates typically stem from civil lawsuits, family law proceedings, or criminal cases where a court orders one party to pay another. Court orders establish a legal payment requirement, allowing enforcement if not paid willingly.

A judgment debt is money a court has determined is owed by a judgment debtor to a judgment creditor after a civil lawsuit. Once a monetary judgment is entered, the debtor is legally obligated to pay. The judgment creditor can undertake enforcement actions if voluntary payment is not received. Collection efforts can begin immediately after a judgment is finalized.

Child support and alimony, also known as spousal support, are regular payments ordered by family courts. Child support provides for a child’s care, maintenance, and education after parental separation or divorce. Alimony provides financial assistance to a former spouse, with the amount and duration often determined by family circumstances and earning capacities. Both child support and alimony are non-voluntary obligations, and non-compliance can lead to serious legal consequences, including income withholding.

Restitution is money a court orders a convicted criminal to pay to victims of their crime. It compensates for financial losses or damages directly resulting from the offense. It can cover lost income, property damage, medical expenses, or funeral costs, but generally excludes pain and suffering. Compliance with a restitution order often becomes a condition of the offender’s probation or supervised release, and the order itself can act as a lien against the offender’s property.

Payments Enforced by Government Agencies

Government bodies, whether federal, state, or local, possess distinct powers to compel payments for unpaid taxes, fines, or other governmental obligations. These enforcement actions are backed by governmental authority, often allowing for direct collection without requiring a separate court judgment for the specific collection action. This ensures compliance with public financial duties.

A tax levy is the legal seizure of property or funds by a government tax authority (e.g., IRS) to satisfy an unpaid tax debt. It is a direct enforcement action, differing from a tax lien which secures the government’s claim against property. The IRS can levy various assets, including bank accounts, wages, retirement accounts, and physical property like vehicles or real estate. Before a levy is issued, the tax authority assesses the tax, sends a demand for payment, and provides a final notice of intent to levy, allowing the taxpayer a period to respond.

Administrative fines and penalties are monetary charges imposed by government agencies for violations of laws, regulations, or ordinances. Examples include traffic tickets, environmental fines, or penalties for non-compliance with business licensing requirements. Unlike criminal penalties, these fines are civil in nature and do not result in a criminal record. If these fines are not paid voluntarily, the issuing government agency can pursue forced collection methods, which may include placing liens or initiating wage garnishments.

Government entities can initiate garnishment actions to collect debts owed to them. This often occurs for defaulted federal student loans, where the federal government can garnish up to 15% of a debtor’s disposable wages without a court order. Federal or state tax refunds and Social Security benefits can also be intercepted through programs like the Treasury Offset Program to recover delinquent student loan debt or other government-owed amounts. Borrowers receive advance notice and have the right to request a hearing to dispute the garnishment.

Payments Initiated by Creditors

Private individuals or companies, acting as creditors, can compel payments to recover outstanding debts, often after securing a court judgment. They allow creditors to access a debtor’s assets or income to satisfy the financial obligation. The process usually involves legal procedures to ensure lawful collection.

Wage garnishment is a legal procedure where a portion of a debtor’s earnings is withheld by their employer and paid directly to the creditor. It typically requires the creditor to obtain a court order or judgment against the debtor. Once the employer receives a writ, they are legally obligated to make the specified deductions from the employee’s pay until the debt is satisfied. Federal law limits the amount of disposable earnings that can be garnished to ensure debtors retain sufficient income for living expenses.

A bank account levy, also referred to as a bank garnishment, is the legal seizure of funds from a debtor’s bank account by a creditor. Similar to wage garnishment, this action usually requires the creditor to first obtain a court judgment. Upon receiving levy documents, the bank is legally required to freeze funds up to the amount owed, preventing withdrawals by the debtor. After a variable waiting period, the bank releases the funds to the creditor to satisfy the unpaid debt.

Repossession is when a lender takes back property used as collateral for a secured loan after a borrower defaults on the loan terms. Examples include cars, boats, or other consumer goods. Unlike many other collection methods, repossession often does not require a prior court order if the loan is secured, as the security agreement typically grants the lender this right upon default. Once repossessed, the lender sells the property to recover the outstanding debt, with any deficiency potentially still owed by the borrower.

Foreclosure is the legal process where a lender takes possession of real estate due to the borrower’s failure to make mortgage payments. It allows the lender to recover the outstanding loan amount by selling the property. The legal basis stems from the mortgage or deed of trust, which establishes the property as collateral. Foreclosure proceedings can be lengthy and vary by jurisdiction, but they ultimately lead to a forced sale of the property to satisfy the mortgage debt.