It depends on who the creditor is and what they are garnishing for. Wages and bank accounts are most commonly garnished. However, if you owe taxes, child support, spousal support or student loans, many other sources of income are at risk of garnishment. If you are experiencing financial difficulties such that you are at risk of garnishment, seek counsel from a good attorney. There may be ways to defend a garnishment or you may be a good candidate to file bankruptcy and stop garnishment action for good.
What Can Be Garnished?
The most commonly garnished account is your wages. An regular, judgment creditor can take the lesser of 25% of your disposable pay (explained below), or the amount that exceeds the federal minimum wage times 30 per week (as of 2017, $7.25 x 30=$217.50). The amount may be different if it is a child support creditor, student loan creditor or tax creditor who is garnishing. With a wage garnishment, the creditor notifies your employer that they have obtained a judgment against you and instructs the employer to send a portion of your wages each time you are paid to the court, who then sends it to the creditor, after deducting a fee.
Another common type of garnishment is a bank levy or bank attachment. With a bank levy, the creditor notifies your bank that they have obtained a judgment against you and instructs the bank to send the contents of your bank account to the creditor. The bank will typically leave a few hundred dollars in the account, but there is no upper limit on what the bank can send in, other than the amount owed to the creditor.
What Can’t Be Garnished?
Typically, a regular judgment creditor can’t garnish the following accounts:
• Tax refunds
• Unemployment compensation
• Worker’s compensation
• Public assistance
• Social security
• Child support and spousal support that have been received by the debtor
• Veteran’s benefits, whether pension or disability
The rules are different if you owe certain debts: child support, spousal support, student loans or taxes. All of these accounts are subject to garnishment for these debts. Worker’s compensation and unemployment compensation are also subject to garnishment if there has been a prior over-payment of this type of income. Your state tax refund may be at risk if you owe money to any state agency. Different states have different rules, but if the state Attorney General is trying to collect something from you, chances are your state tax refund is at risk.
Special Rules Regarding Bank Accounts
Be careful about depositing funds that can’t be garnished into the same account as funds that can be garnished. Funds that can’t be garnished should be segregated because they will lose their protection if they are commingled with other funds once deposited into the bank account. Say you receive social security, and you also have a part time job, and you have both checks deposited into the same checking account. If a creditor serves a bank levy on your checking account, courts generally find that once the funds are mixed together in the same account, the exempt funds are no longer exempt from attachment unless you can prove that the only funds in the account at the time of the bank levy notice are exempt funds. If you find yourself in this situation, it is much simpler and safer to simply maintain segregated accounts.
Questions for Your Attorney
• Is my income subject to garnishment?
• How much can a creditor garnish?
• Does filing for bankruptcy make sense in my case?