When you default on a debt, creditors will typically do whatever they can to collect their money. If collateral secures the debt, the creditors will repossess the collateral and sell it. Unsecured creditors may attempt to garnish your wages or remove money from your bank account. However, there are certain types of income that creditors can't legally garnish.
About Garnishment
When you default on a debt, the creditor will send your account to collections. If you still don't pay, the creditor or collections agency may obtain a judgment that allows it to garnish your wages or seize the funds in your bank account. Creditors and collection agencies may also take possession of your personal property and sell it to pay your debt.
Texas Law
Texas doesn't allow creditors to garnish wages for consumer debt or debts resulting from breach of contract, so most creditors in Texas can't garnish your retirement check. Under federal law, creditors can't garnish social security retirement income for consumer debts or breach of contract in any state. However, if you owe a debt in a state that allows creditors to garnish other types of retirement income, the creditor may garnish retirement checks you receive in Texas.
Exemptions and Limitations
Though Texas won't allow creditors to garnish wages for most types of debt, creditors can garnish wages for child support, alimony, government debts and student loans. If you receive retirement benefits, including those from social security, creditors may garnish them to satisfy these debts. If the debt is for taxes or child support, creditors can garnish up to 60 percent of your wages. However, creditors collecting alimony, student loans or other government debts can't typically garnish more than 25 percent of your income.
Bank Accounts
Texas does allow creditors to seize funds in borrowers' bank accounts for unpaid debt. To do so, the creditor must obtain a judgment and writ of execution. However, if you have deposited wages into your account that should be exempt from the creditor's garnishment, the creditor can't legally remove them from the account.
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