Part Two of Act LIII of 1994 on Judicial Execution deals with the execution of claims for money. Chapter IV of Part Two regulates the garnishment of wages and other emoluments, Chapter V applies to the attachment of sums administered by financial institutions, Chapter VI covers the attachment of movable property (e-note 4) while Chapter VII contains the regulations on the attachment of real property (e-note 5).
The principle of gradualness must be respected during enforcement. Accordingly, if it is anticipated that the claim cannot be collected within a relatively short period of time by means of the attachment of wages or funds administered by payment service providers, any attachable property of the debtor can be attached. Attached real property can only be sold if the claim is not fully covered by the other property of the debtor or can only be satisfied after the lapse of a disproportionately long period.
In this E-note
The attachment of wages and other emoluments, as well as that of sums administered by financial institutions precedes the more severe forced actions (e.g. attachment of movable and real property).
As regards claims for money, the attachment of wages and other emoluments is the simplest and most moderate and cost-efficient form of pecuniary force.
A garnishment is issued by the bailiff if the execution procedure has already been ordered by the issue of the enforcement order. Another condition is that the debtor has failed to pay his debt within 15 days since the service of the enforcement order. In addition to the garnishment by the bailiff relating to wages, the bailiff can also attach the movable and real property of the debtor as well.
In the garnishment order, the bailiff notifies to the debtor’s employer the need to withhold the amount indicated therein and to pay such amount to the garnishor or to transfer it to the bailiff’s escrow or other account.
1. The garnishment of wages
Section 58 (1) of the Execution Act: In case that the debtor has failed to pay his debt in the course of the bailiff’s on-site proceedings or within 15 days of the service of the enforcement order by mail, the bailiff shall issue a garnishment order on the debtor’s wages (Section 7 (1)).
(2) In the garnishment order, the bailiff shall notify the debtor’s employer the need to withhold the amount indicated therein and – in accordance with the notification – to pay such amount to the garnishor, or, in special cases, to the bailiff’s escrow account or to another designated account.
(3) The bailiff shall send copies of the garnishment order to the employer and to the parties.
(4) A garnishment order for the collection of support shall be issued within 3 days following the expiry of the deadline or time limit specified in Subsection (1).
Section 59: In case of a change in the debtor’s employer, the effect of the garnishment order shall remain applied without necessity of a new garnishment order on debtor’s wages received from a new employer.
Bailiffs use standardised forms for garnishment orders. The garnishment order shall be established as to allow ascertainment of the name of the court adopting the decision, the case number and content of the final decision, the legal title and amount of the claim, the name and residential address of the debtor, as well as any other data required for his identification, the bailiff’s data, the name and registered office of the employer along with the percentage of the wages that must be withheld for the claim.
The basis for withholding is the net wage. Generally, no more than 33 per cent a month or, in exceptional cases, no more than 50 per cent a month may be withheld from wages, health insurance and other emoluments (sick pay, pension).
The part of the wage or emolument paid each month, which corresponds to the lowest amount of the minimum old age pension, is exempted from garnishment (in 2009, such amount was equal to HUF 28,500).
This so-called minimum exemption does not apply in case of enforcement of child support or costs related to childbirth.
2. Garnishment of pensions
As regards the withholding of pensions, Section 67 of the Execution Act provides for the following:
Section 67 (1) No more than 33 per cent of the social security pension, emolument before the age limit, service emolument, ballet dancer’s life annuity or temporary miner annuity (hereinafter referred to collectively as “pension”) of a debtor may be withheld.
(2) Deduction of no more than 50 per cent may be effected from pension payments for the following claims:
a) child support,
b) pension received without entitlement.
3. Garnishment of Health Insurance Benefits Provided in Money
Section 68 No more than 33 per cent may be withheld from compensation received for accidents, from accident sick pay, sick pay, child-care allowance and maternity support and benefits for the following claims:
a) child support,
b) health insurance benefits received without entitlement.
4. Garnishment of the Various Child-care Benefits
Section 69 (1) No more than 33 per cent may be withheld from child-care allowances and from child-raising allowances to recover any child-care and child-raising allowances and maternity support received without entitlement.
(2) No more than 33 per cent may be withheld from family allowance to recover any family allowance and maternity support received without entitlement.
5. Exempted emoluments
Section 74 The following shall be exempt from garnishment:
a) national welfare benefits, support allowance for war veterans, and the life annuity provided according to the Act on the Compensation of Victims of Political Persecution;
b) temporary aid including the one received for a specific purpose, social aid established within the framework of eligibility for allowance for those of active age, annuity for the elderly, supplementary income allowance for the unemployed, and care allowance;
c) maternity support,
d) disability benefits and allowances for the blind,
e) benefits of workers with some degree of incapacity and workers with health impairment (wages supplement, temporary wages supplement, income supplement, temporary income supplement, regular social allowance, temporary support, health impairment benefits provided to miners);
f) support payments prescribed by law, including child support advanced by the court and monetary support for child protection under the Act on Child Protection and Custody Administration,
g) welfare provisions paid to foster parents for the support of children in State care,
h) scholarship, with the exception of scholarships of scientific training programs paid as wages (Paragraph d) of Section 66),
i) cost reimbursement related to business trips, foreign assignments and commuting,
j) payments to cover designated expenses,
n) aid to the disabled.
The funds of the debtor administered by financial institutions can be attached by means of a court transfer order or bailiff’s official transfer order.
Pursuant to the Execution Act, all of the debtor’s movable and real property may be seized. Within the framework thereof, the Act focuses particularly on the funds due to the debtor as claims for money must be collected during judicial execution firstly from the funds administered by financial institutions and available to the debtor or the debtor’s wages. Any other property of the debtor may only be attached if the foregoing are unsuccessful (cf. the principle of applying enforcement gradually and proportionately).
Section 79/A of the Execution Act
(1) The funds administered by payment service providers and due to the debtor may be subject to attachment without limitations, except for the funds of natural persons which are to be attached pursuant to Subsections (2) and (3).
(2) The portion exceeding quadruple the amount of the minimum old age pension, of the funds administered by payment service providers, and due to natural persons may be subject to attachment without limitation; in case of funds under such threshold, 50 per cent of the portion between the minimum old age pension and quadruple the amount of the minimum old age pension may be subject to attachment.
(3) In case of funds administered by payment service providers and due to natural persons, the portion up to the amount of the minimum old age pension shall be exempt from attachment. If the subject of enforcement is the collection of child support or childbirth-related costs, 50 per cent of the above-specified amount may also be subject to attachment.
If the funds administered on the payment account designated in the transfer order or official transfer order submitted by the bailiff are insufficient to cover the amount of the claim, whether in whole or in part, the payment service provider shall extend the enforcement to the other funds due to the debtor and administered by the payment service provider under any payment account agreement, deposit agreement or savings deposit agreement as well.
Irrespective of the currency stipulated in the order of the authority implementing the enforcement, the order must be fulfilled in forints, observing the foreign exchange buying rate applied by the payment service provider in force on the date of settlement.
The funds on an account that is held by several account holders at the payment service provider may be subject to attachment without limitation for claims against either account holder.
The bailiff must immediately notify the garnishment order to the account holder, who is not the debtor, at the mailing address received from the payment service provider.
1. Order of Transfer
Section 80 of the Execution Act
(1) At the creditor’s request, the court of jurisdiction for issuing a certificate of enforcement or an enforcement clause shall, for the enforcement of a claim for money, issue an order of transfer for the attachment of the debtor’s funds administered by the payment service provider, including the funds administered on accounts from which no transactions are made.
(2) In the order of transfer, the court shall instruct the payment service provider where the debtor’s funds are administered to pay the amount of the claim indicated in the notice to the creditor, or to transfer such amount to the payment account designated by the creditor.
2. Actions taken by the bailiff for the attachment of funds administered by a payment service provider
The bailiff proceeds to the attachment of the debtor’s funds administered by a payment service provider, including the accounts from which no transactions are made, by submitting an official transfer order as payable to the bailiff’s deposit account.
The debtor’s payment service provider shall comply with the bailiff’s instructions and transfer the amount indicated in the notice from the funds available on the account to the bailiff’s escrow account.
If the payment service provider does not administer any funds available to the debtor in forints, the order may be directly applied in relation to the funds administered in foreign currency as well.
If the enforcement order contains the particulars of the debtor’s current account, or if the funds held on the debtor’s current accounts can be attached and the particulars of the debtor’s current account are otherwise available, the bailiff shall issue the order within two working days of the date of receipt of the enforcement order, and shall deliver the enforcement order within five working days by post. Provided all other requirements for payment are satisfied, the sum thus recovered may be paid after 15 days following the date of delivery of the enforcement order.
3. Attachment of Savings Deposits
Pursuant to Section 83 of the Execution Act, deposits and savings deposits placed at a financial institution, as well as the savings book or other document issued that prove such account, may be subject to attachment without any limitation, with the exceptions set forth under Sections 79/A through 79/D.