When a person is laid off from his job, he will often, if eligible, choose to receive unemployment benefits from his state government. These benefits are used to pay basic bills. However, if the person is awarded benefits incorrectly or through fraud, he may owe the state money, which can be collected through garnishment.
Unemployment Benefits
Unemployment benefits are only eligible to certain workers, namely people who have been laid off for reasons that were not their fault. These benefits are free -- a person does not have to pay any kind of fee to receive benefits -- although she must usually pay taxes on them. However, if she receives more money than she should, the money she owes back constitutes a debt to the state.
Garnishment
Wage garnishment is when a creditor seizes money out of a person's paycheck or siphons it off from another source of income. Garnishment will often be used by creditors when a debtor is unwilling to pay what he owes. Garnishment is available to state governments who are owed money as well as private creditors. However, some forms of income cannot be legally garnished.
Federal Taxes
If a person overpays to the IRS on his federal taxes, then the person may be provided with a tax refund -- a check from the government in the amount of the overpayment. According to federal law, only the United States federal government agencies are allowed to garnish a person's income tax refund. A state government agency cannot garnish this money, although it might be able to take it out of the debtor's bank account.
Bank Account Seizure
When money is deposited in a bank account, it is sometimes available to creditors. Much like the receipt of a garnishment order, creditors can receive an order from a judge that allows them to take money out of a person's bank account if she owes them money. While tax refunds are protected against seizure through garnishment, they are not protected once they have been deposited in an account.
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