Can Someone Garnish a Checking Account?

One way in which creditors force unwilling debtors to meet their payment obligations is through garnishment. While some creditors seek a wage garnishment, others prefer to seize unpaid debts with a checking account garnishment. This form of garnishment allows a creditor direct access to the funds you hold in your private bank account.

Facts

Before a private creditor can initiate the garnishment process, it must win a lawsuit against you for the unpaid debt you owe. Private creditors include, but are not limited to: credit card companies, hospitals, collection agencies and individuals. The court will then issue a court judgment to the creditor. Without a court judgment, garnishment isn't an option. The U.S. Department of the Treasury notes, however, that if you owe a tax debt to the IRS, the government can seize money directly from your checking account without first pursuing a court judgment.

Features

After obtaining a judgment, the creditor must apply for a writ of garnishment from the court. If the creditor knows where you bank, it pays a nominal fee to have the writ of garnishment delivered to your financial institution. After freezing your account, your bank will then notify you of the impending checking account garnishment.

Significance

While wage garnishment is detrimental to some debtors' financial security, a checking account garnishment can be devastating. Once a bank freezes your checking account, you can make additional deposits but not withdrawals. Most states allow banks to freeze your accounts without first notifying you of the impending garnishment -- lest you immediately withdraw all available funds. Unfortunately, if you aren't aware of the impending garnishment, you may continue to make purchases against your account that subsequently fail to clear. In most states, checking accounts remain frozen for 20 days before the actual garnishment takes place.

Considerations

A creditor can garnish all of the nonexempt funds within your checking account. Any exempt funds present in the account, however, must remain within your control. Social Security payments, unemployment payments and child support are all examples of funds that creditors cannot garnish from your checking account. If a creditor seizes exempt funds from your bank account, you can file a lawsuit to recover the money lost.

Effects

Because checks and debits cannot clear a checking account that has been frozen prior to a garnishment, you could face considerable fees from both independent merchants and your bank following the garnishment. You have the right to return to court and contest the judgment that preceded the garnishment. If the court overturns the original judgment, your creditor must return any funds it garnished from your checking account.