Debtor and Creditor

What Can a Creditor Garnish?

Learn the rules that apply to garnishments.

When you hear mention of a garnishment, most people are referring to a wage garnishment, wherein a creditor takes a particular amount directly out of your paycheck. Sometimes people call a bank levy—a collection tool that allows a creditor to take funds out of a checking or savings account—a garnishment too. In either case, the garnishment amount, if anything, will depend on the type of the debt.

How Does a Garnishment Work?

A wage garnishment starts after the creditor notifies your employer about its right to a portion of your earnings. Your employer will forward the appropriate amount to the court, who then sends it to the creditor, after deducting a fee.

Under federal law, an ordinary judgment creditor (more below) can take the lesser of 25% of your disposable pay, or the amount that exceeds the federal minimum wage times 30 per week (as of 2017, $7.25 x 30=$217.50). Some states have laws that decrease the amount a creditor can grab so you’ll want to find out the specific rules for your state. Keep in mind, however, that the same law doesn’t apply if the debt is child support (50-65%), a student loan (15%), or a tax obligation (the amount fluctuates, but can be extremely high).

Another common type of garnishment is a bank levy or bank attachment. With a bank levy, the creditor instructs the bank to send the contents of your bank account to the creditor. The bank will notify you of the levy and give you a short period to object, so it’s important to do so quickly.

(For more information, read Can You Stop a Garnishment Once It Has Started?)

How Much Can a Creditor Take?

Creditors can use a garnishment to collect on certain obligations automatically, but not all debts. For instance, if you owe court-ordered support, student loans, or taxes, the creditor can garnish your wages without doing more, and, in some cases, levy against your bank account and tax return.

For most other types of debt—such as credit card debt, medical bills, and personal loans—the creditor must take additional steps. Specifically, the creditor is required to sue you in court, win, and get a money judgment against you.

The creditor must have a money judgment in hand before garnishing your wages or levying against your bank account. Without a money judgment, all the creditor can do is ask you to pay off the debt voluntarily.

(Find out more in When Can a Creditor Garnish Your Wages?)

Are Any Funds Safe From Garnishment?

Typically, a judgment creditor can’t garnish the following accounts:

  • tax refunds
  • unemployment or worker’s compensation benefits
  • public assistance
  • Social Security and Veteran’s benefits
  • pensions, and
  • child support and spousal support received by the debtor.

Again, the rules are different if you owe a domestic support obligation, taxes, or student loans. In most cases, the accounts listed above are subject to garnishment if you owe one of these debts.

Worker’s compensation and unemployment benefits are also subject to garnishment if there has been an overpayment. And, although state rules differ, your state tax refund might be at risk if you owe money to a state agency (for instance if you owe a traffic ticket or receive a public assistance overpayment).

Speak With an Attorney

Be aware that if a creditor has the right to a garnishment, the creditor will likely be able to take action against other property that you own. If you have anything of substantial value, you’ll want to find out if you’re at risk of losing it.

An attorney can evaluate your case and help you decide whether you should negotiate your debt, or, if you’d be better off exploring another action, such as defending against the garnishment or stopping it by filing for bankruptcy.

(Learn more by reading How to Stop a Wage Garnishment.)

Questions for Your Attorney

  • Is my income subject to garnishment?
  • How much can a creditor garnish?
  • Will filing for bankruptcy take care of the garnishment?
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