Louisiana Garnishment Changes Raise Risks for Banks and Strengthen Creditor Rights

When someone obtains a judgment against another person in a Louisiana court, they can serve garnishment interrogatories on the debtor’s bank. The bank must respond and turn over the debtor’s non-exempt funds. Louisiana recently updated the process for seizing debtor assets, strengthened consequences for garnishee noncompliance, and streamlined procedures for financial institutions.

If banks ignore the garnishment process or don’t respond fast enough, they could face severe consequences. The law took effect Aug. 1, and practitioners involved in judgment enforcement should take immediate steps to update their forms, processes and compliance protocols.

The 2022 Overhaul of Louisiana’s Judgment Garnishment Laws

Act 265 restructured Louisiana’s garnishment process across several key Code of Civil Procedure articles and Revised Statutes provisions in 2022. These include:

• • Service and Response Requirements. The sheriff must serve the garnishee with a complete package — citation, petition, interrogatories and a notice of seizure. Judgment creditors must also send written notice to the judgment debtor by mail or electronic means, though the debtor’s notice does not affect seizure validity. Garnishees must file sworn answers within 30 days of service.
  • Failure to Answer. If a garnishee fails to respond, the judgment creditor may proceed by contradictory motion. The garnishee’s failure to answer is prima facie proof that the garnishee holds the debtor’s property.
  • Traversing Answers. A seizing creditor must file a contradictory motion traversing the garnishee’s answer within 30 days after service of notice. Failure to traverse releases any unseized property.
  • Delivery and Wage Garnishment. New provisions govern when and how a garnishee must deliver property to the sheriff (with an exemption for wage garnishments). Garnishees must serve a statement of sums due and provide that garnishment effects automatically cease upon termination of employment, unless the debtor is reinstated within 180 days.

2026 Amendments Increase Penalties but Make Compliance Clearer

Two 2026 acts – Act 268 and Act 250 – clarified the garnishment process for financial institutions and heightened consequences for noncompliance.

Financial Institutions Put on Notice for Non-Response

The notice served on a garnishee must now include a prominently displayed boldface warning: “The failure to file into the court record within thirty days your sworn answer to these interrogatories may cause you to be personally responsible for the entire amount owed by the judgment debtor.”

This change eliminates any claim by a garnishee that it did not understand the consequences of non-response.

Non-Response Penalties and Burden of Proof Expanded

A defaulting garnishee now has a 30-day window from service of a default judgment to move for a new trial. The motion must include an affidavit affirming specified facts.

At the new trial, the garnishee bears the burden of proving it never held the debtor’s property during the garnishment period (or has satisfied the judgment to that extent).

Critically, Article 2413(C) now mandates costs and reasonable attorney’s fees against the garnishee for the initial failure to respond — regardless of the outcome of the contradictory motion — including additional costs and fees actually incurred due to the garnishee’s fault.

Streamlined Delivery by Financial Institutions

Act 250 creates a simplified delivery mechanism for federally insured financial institutions.

For deposits of $1,000 or less, a bank may deliver funds to the sheriff without further court order if no opposition is received. For deposits exceeding $1,000, the bank may deliver funds after waiting 30 days from filing its answer, again without further court order absent opposition.

This eliminates an unnecessary procedural step that previously delayed fund recovery.

What This Means for Banks and Lenders

• • Heightened exposure for garnishees. Banks, employers and other garnishees face mandatory costs and attorney’s fees for failing to respond — even if they ultimately prevail on the merits. Compliance departments should review response protocols.
  • Financial institutions benefit from streamlined processes. The new tiered delivery mechanism under Act 250 reduces the need for additional court orders, allowing faster resolution of garnishment obligations.
  • Creditors gain stronger enforcement tools. The combination of explicit warnings, mandatory fee-shifting, and clear burden-of-proof allocations strengthens judgment creditors’ position when dealing with non-responsive garnishees.
  • Defaulting garnishees retain limited recourse. The structured new-trial mechanism provides a path to challenge a default, but places a high evidentiary burden on the garnishee and does not relieve the fee obligation.

These changes represent a meaningful shift in Louisiana’s garnishment landscape. Judgment creditors seeking to enforce debts, financial institutions managing garnishment compliance, and debtors navigating the process all need to understand the new requirements.

Please contact Tim Byrd or any member of our litigation or financial services teams with questions.