Can a Creditor Garnish My Bank Account?
Garnishment of checking and savings accounts is one debt recovery option some creditors employ. If you leave debts unpaid, a creditor that sues you can request the court's permission to seize money within your bank accounts as payment for the neglected debt. Once a creditor has a court order allowing it to garnish your bank account, your bank must comply.
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Facts
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A creditor can only garnish your bank accounts if it has a legal judgment against you. A creditor obtains a judgment by filing suit against you in your county court and winning the case. It then requests a certified copy of the judgment from the court clerk. This lets your creditor request a writ of garnishment. The creditor uses this garnishment order to seize money directly from your savings or checking accounts.
Exemptions
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Creditors can only seize non-exempt funds from your accounts. According to the U.S. Department of the Treasury, if your bank accounts contain exempt income, such as unemployment, Social Security, child support or alimony, you can protect these funds from seizure by promptly notifying your bank of any exemptions you have. Once the bank validates your claim, it will shelter your exempt funds from garnishment.
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Time Frame
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After your creditor obtains a writ of garnishment from the court, it can garnish your bank accounts relatively quickly. Bankrate.com notes that the average bank account garnishment by a creditor takes less than a month. Before turning over any non-exempt money within your bank accounts to your creditor, your bank will place a 21-day freeze on your accounts. This gives you time to fight the creditor's judgment or clear any exemptions you have with the bank.
Misconceptions
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Many debtors mistakenly believe their money is safe from garnishment if they share a bank account with another individual. In many states, however, a creditor can garnish your bank account even if you share that account with someone else. Each state has specific laws in place that creditors must follow when garnishing joint bank accounts. Some states allow creditors to seize all of the funds present within a joint bank account while others limit creditors to only half.
Prevention/Solution
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While bankruptcy is not a wise financial choice for everyone, the automatic stay bankruptcy carries protects you from all collection activity. Thus, even if you rightfully owe your creditor the debt and the court approved its garnishment request, your bank cannot release any of the money in your account to your creditor.
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