Distraint and garnishment

Distraint and garnishment are intended to secure the repayment of a debt in enforcement: the income of the debtor is garnished and his or her assets distrained to an amount covering the debt in enforcement. In general, all types of asset and income are subject to distraint or garnishment. Ordinary household effects will not be distrained. If the creditor has requested only limited enforcement, distraint measures will not be directed at assets that need to be liquidated (e.g. real estate or vehicles).

In the regular case, the wages, salary, pension or business income of the debtor is garnished. (For details, see garnishment of wages and garnishment of business income.)

Movable assets that can be distrained include vehicles, securities, shares in a housing company, tax refunds, bank deposits and cash. Real property can also be distrained.

In many cases the debtor owns a property jointly with another person. Jointly owned items or real estate may under certain conditions be distrained in full. Before a jointly owned object is sold, the joint owner is reserved an opportunity to redeem the debtor’s share of the item. If the joint owner decides not to exercise his or her right of redemption, the jointly owned item may be sold through enforcement proceedings. In this case an amount of the selling price corresponding to the share of the joint owner will be remitted to him or her.

The rule of thumb is that movable assets are distrained before real property. The assets that the debtor needs for his or her business or otherwise needs the most are distrained in the last resort. In certain cases, the debtor has the right to influence the order of distraint by indicating certain assets as distrainable.

Distrained assets are realised by way of an auction. It is, however, not always necessary to hold the auction. Namely, distraint may be carried out also as security for a payment plan, in which event the auction is held only if the debtor fails to keep to the plan. If the debt is repaid, the distraint lapses and the assets are returned to the debtor.

Published 7.5.2020
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