If you are self-employed, unemployed or retired, creditors cannot garnishee your wages, as wage attachment involves employer withholding from paychecks through a court order. Dependent on state and federal law, creditors can garnish bank accounts, place property liens, seize assets and in some cases, take your tax refund. Excluding the IRS, creditors need a court order to attach your wages or garnishee bank accounts.
Non-Wage Income Garnishment
Generally, Social Security payments, disability compensation, child support, unemployment benefits and most government assistance or retirement incomes are exempt from garnishment. Government agencies may garnishee income commonly exempt from attachment for state or federal debt, student loans or support obligations. The IRS will not take your unemployment benefits for back taxes, but they will take all or part of your tax refund to pay non-tax federal debt, state debts and child support payments.
Bank Accounts
When the courts authorize a bank levy to repay debt, your bank freezes the account, denying access to the funds. The bank then withdraws funds to repay debt. The funds in your bank account are provided the same protection and exemptions as regular wage or income garnishment. If your bank freezes an account containing exempt income, notify the bank, the issuing court and the creditor of income exemptions. Your bank may not free the funds until directed to do so by the courts.
Property Liens
Depending on state law, creditors may place liens against your property or request that the court sell your assets to repay debt. Generally, real estate is exempt from seizure for most consumer debt. Different laws may apply for taxes and other government debt. With property liens, the creditors acquire payment from proceeds if the property is sold.
Concerns
Married couples living in community property states and couples with joint accounts may be subject to garnishment for a spouse's debt. In these cases, creditors may request garnishment of the working spouse's wages or levy a joint bank account. Contact your state attorney general's office or seek qualified legal counsel concerning state laws and spousal protections.
Considerations
Creditors can garnishee your wages when you re-enter the work force. Federal law allows garnishment of up to 25 percent of your paycheck after deductions, or the amount that your disposable income exceeds 30 times the minimum wage. Child support, tax debt and bankruptcy repayment plans allow for greater garnishment amounts. Disposable earnings are your wages after taxes, unemployment insurance payments and some retirement account deductions.
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