A creditor or debt collector cannot take it upon himself to garnish your bank account or wages; he must first get a judgment against you for the money you owe. The Internal Revenue Service is exempt from this limitation, but all other creditors have to take certain legal steps before they can garnish your wages or accounts. In California, you have the advantage of state laws that favor debtors a little more than creditors.
Earnings
California makes it very difficult for a debt collector to take anything other than traditional W-2 income. Even then, the collector is limited as to how much she can garnish. Federal law exempts the equivalent of 30 times the minimum hourly wage each week. As of 2011, the federal minimum wage was $7.25 per hour. California's minimum wage was $8 per hour in 2011, but California defers to federal law on this issue and will only protect the equivalent of $7.25 per hour, or $290 a week for a 40-hour workweek, minus tax deductions. At least this much of your paycheck is safe from garnishment. If you earn significantly more than minimum wage, the debt collector can take 25 percent of your earnings after taxes. If your net take-home pay each week is $1,000, the creditor can take $250.
Bank Accounts
Debt collectors can also garnish your checking, savings and investment accounts for the money you owe. In this case, there are fewer limitations. A creditor must first get a writ of execution from the court, but then he can seize the entire amount of your debt. If you owe $5,000 and your checking account contains $2,000 to use toward next month's bills, the creditor can take all of those funds. However, California does give you the right to prove that the creditor is not entitled to all of the money if some of it came from exempt sources other than your regular income.
Exemptions
According to California law, many sources of income are exempt from claims by debt collectors. If a creditor garnishes your checking account and it contained any money from exempt sources, you can probably get it back if you can prove where the money came from. For instance, California protects all money you receive from pensions, IRAs, public assistance, worker's compensation, unemployment benefits, union benefits and insurance proceeds. If you just received a pension payment in the amount of $1,000 and it went into your checking account, then the debt collector garnished the entirety of your checking account, she can't have that money. You'd have to prove through deposit slips and documentation that your pension was the source of the money. A creditor also can't garnish such checks directly.
Tip
The protection that California gives debtors can be complex. If a creditor or debt collector gets a judgment against you, or if you receive notice that he is applying to the court for a writ of execution, you should immediately contact an attorney to make sure you understand all the exemptions and alternatives that California offers you. Some lawyers offer free consultations, but ask when you call for an appointment to make sure.
Warning
The minimum wage/25 percent garnishment rule only applies to consumer debt. For instance, if you owe delinquent taxes or past-due child support, your creditor can usually garnish more.
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