If a judge rules that you owe money, the creditor may be able to take money from your paycheck or other benefits in order to satisfy the judgment. State and federal laws limit how much a creditor can garnish from your wages. Additionally, they protect a minimum amount in your bank account from levies even if you do not receive federal benefits, or they restrict the amount that a creditor can garnish from an account where your benefits are deposited.
Most creditors are only able to take money from you through wage or benefit garnishments if a court rules that you owe them money and that they have the right to take money from you in order to pay them back. A garnishment order often gives a creditor the right to deduct extra interest, fees, or collection costs from the judgment amount.
Don’t let a debt collector drain your savings! Understanding your rights and options when it comes to bank account garnishment is crucial to safeguarding your hard-earned money. This guide, powered by Upsolve and the Consumer Financial Protection Bureau (CFPB), will equip you with the knowledge you need to navigate this complex situation.
What is Bank Account Garnishment?
Imagine this: you check your bank account balance and find it unexpectedly empty. Turns out, a debt collector has “garnished” your account, meaning they’ve legally seized funds to pay off a debt you owe. This can be a frustrating and stressful experience, especially if you’re unaware of your rights and options.
How Can a Debt Collector Garnish My Account?
In most cases, a debt collector needs a court order, called a “writ of garnishment,” to access your bank account. This typically involves the following steps:
- Debt Collection: The creditor attempts to collect the debt directly from you through various means like phone calls, letters, and emails.
- Lawsuit: If you don’t pay the debt, the creditor may sue you in court.
- Judgment: If the creditor wins the lawsuit, they obtain a court judgment against you, legally obligating you to pay the debt.
- Garnishment Order: The creditor requests a garnishment order from the court, allowing them to seize funds from your bank account.
- Bank Levy: The court issues a garnishment order to your bank, instructing them to freeze and transfer funds to the creditor.
Important Exceptions:
Government agencies like the IRS or child support enforcement offices can bypass the court order and directly garnish your account for unpaid taxes or child support, respectively.
What Protections Do I Have?
Fortunately, you’re not entirely powerless against bank account garnishment. Here are some safeguards you can leverage:
Federal and State Exemptions:
Federal law protects certain benefits like Social Security, SSI, and veterans’ benefits from garnishment. Additionally, each state has its own exemption laws, shielding specific types of income or a certain amount of money in your account from being seized.
Claiming Exemptions:
If you believe your funds are exempt from garnishment, you need to act promptly. Contact your bank and provide documentation proving the exemption. You may also need to file a claim with the court.
Negotiating with the Creditor:
Reaching a settlement with the creditor can prevent further garnishment. Consider offering a lump-sum payment or setting up a payment plan.
Bankruptcy as a Last Resort:
Filing for bankruptcy can halt all collection efforts, including garnishment. However, this is a major decision with long-term financial implications, so consult with a bankruptcy attorney before proceeding.
Additional Resources:
- Upsolve: Upsolve provides a free online tool to help people file for bankruptcy and offers valuable resources on debt collection and garnishment.
- CFPB: The CFPB website offers comprehensive information on consumer rights and protections related to debt collection and garnishment.
- LawHelp.org: This website provides free legal aid and resources for low-income individuals, including information on garnishment exemptions and claiming exemptions.
Remember:
- Don’t ignore court summons or debt collection notices. Ignoring them can lead to a default judgment and garnishment.
- Seek legal advice if you’re unsure about your rights or options. A lawyer can guide you through the process and ensure your rights are protected.
- Don’t hesitate to reach out to Upsolve or the CFPB for free resources and assistance.
Protecting your savings from garnishment requires proactive steps and knowledge of your rights. By understanding the process and utilizing available resources, you can effectively safeguard your hard-earned money and navigate this challenging situation with confidence.
Exceptions for debt to federal or state government agencies
Sometimes, without a court order, federal and state agencies can seize money from your bank account, benefits, or paycheck. Here are some examples:
- The Internal Revenue Service and the Department of Education are two federal agencies that have the authority to withhold up to 15 percent of your Social Security or Social Security Disability Insurance (SSDI) benefits.
- In order to pay child support, states can typically garnish wages or money from a bank account.
Exemptions protect wages, benefits, and money from garnishment
In order to safeguard your earnings, benefits, or money in a bank account and ensure that you have enough to live on, both federal and state laws establish exemptions and limitations.
Federal law generally protects some earned wages from garnishment. You can learn about this protection from the U.S. Department of Labor .
When certain federal benefits are deposited directly into your bank account, banks are required to prevent them from being frozen or garnished. Before freezing or taking money out of your account, the bank must examine it and safeguard the benefits that you received directly into your account for the previous two months. If you deposit federal benefits by check, you can also use this exemption for up to two months’ worth of benefits. Learn how to claim exemptions at LawHelp. org .
Federal benefits covered by this rule generally include:
- Social Security
- Supplemental Security Income
- Veterans’ benefits
- Federal Railroad payments for retirement, unemployment, and sickness
- Civil Service Retirement (CSR) payments
- Federal Employee Retirement System (FERS) payments
State exemptions may also protect some wages or property – such as money in a bank account – from garnishment. You can find out how much your state protects from garnishment and learn how to claim exemptions at LawHelp.org .
How Long Can Creditors Garnish Your Check Or Bank Account?
FAQ
What type of bank accounts Cannot be garnished?
Can debt collectors take money from your savings account?
What money Cannot be garnished?
How can I stop a garnishment on my bank account?
Can a creditor garnish a bank account?
A creditor can repeatedly levy, or garnish, a bank during the life of a judgment. While the creditor cannot harass a judgment debtor, repeated levies or garnishments of bank accounts alone do not constitute harassment, especially if the funds in the bank account are generally not exempt. How long can your bank account be frozen for?
Can a bank account be garnished without notice?
Yes, a bank account can be garnished without notice. A judgment creditor does not need to tell you beforehand that it intends to garnish your bank account. If a creditor were required to give a debtor advanced notice of a bank account garnishment, then the debtor would have the opportunity to empty the account in advance of the garnishment.
What is a bank account garnishment?
A bank account garnishment freezes money in your bank account, allows you to claim an applicable exemption, and finally sends the funds to the judgment creditor. Bank account garnishments are allowed under most state laws. If the money in the account is not exempt, the creditor can obtain the money to help pay the judgment.
Can a bank account be garnished if you live in a state?
Ideally, you would not have to reside in the state that prohibits bank garnishment laws. There are other states where banks may be totally immune from bank account garnishment. However, most (but not all) banks in these states only accept customers who live in the state where the bank is located.