Can My Bank Account in Another State Be Garnished?

If you default on your debts and do not have regular income, your creditors can ask the court to order a bank account garnishment. If the creditor gets an order of garnishment, your bank must freeze your funds up to the amount of garnishment, so that you cannot withdraw these funds (although you can put more money into the bank). After 21 days, your creditor can withdraw the funds from your bank account to settle the debt. Most states allow creditors to garnish bank accounts even if the debtor lives out of state.

State Laws

Creditors must follow state laws when garnishing bank accounts. Thus, if your bank is in another state, creditors can only garnish the bank account if that state's laws permit them to do so. Most states will allow creditors to garnish bank accounts if they have a court order to do so; however, state laws differ as to exemptions from garnishment, and what to do if a debtor has funds in a joint account with a non-debtor.

Exemptions

State laws vary as to which funds are exempt from garnishment, but in most states public assistance funds, alimony and child support and Social Security retirement or disability funds are exempt from garnishment. Thus, if you have a bank account that contains only these funds in another state, your creditor probably cannot garnish the account. Some states also allow you to claim a portion of your assets as a wild card exemption; if your bank is in one of these states, creditors must respect that exemption. If you have exempt and non-exempt funds in the same account, state laws vary as to whether the creditor can garnish the bank account.

Garnishment Process

Creditors must go to court and obtain a judgment against you. If you ignore a court summons regarding your debt, the creditor gets this judgment by default. Once the creditor receives a judgment against you, he asks the court to garnish your bank account. The creditor's investigators find out where you bank and contacts the bank. The bank must freeze all funds up to the amount of the judgment for 21 days and then turn them over to the creditor. The creditor usually does not notify you until after he has contacted the bank, so that you will not withdraw all your funds or transfer them to a bank in another state.

Avoiding Garnishment

The best way to avoid garnishment is to communicate with your creditors if you are having trouble paying your bills. Most creditors prefer making payment arrangements with debtors to taking legal action against them; if you make arrangements to pay what you owe, you most likely will never face bank account garnishment. Do not attempt to avoid garnishment by putting funds in a bank in another state. Your creditors usually will be able to seize the funds anyway if you do this.