How to Protect My Money From Garnishment

Garnishment happens when you owe a creditor money, have ceased to make payments and are not communicating with collectors. Creditors can obtain a judgment against you and by court order can seize money to pay off debts owed. They are not required to give you notice prior to the seizure and as a result you could see money disappearing from your bank account. While there is no real escape from debt save for making routine payments, some strategies can protect your paycheck and current assets from garnishment.

Instructions

1

Pay the debt in full. If you have the money there is no reason to let the debt sit there and wait for a court order to come take your assets and destroy your credit. Most likely the garnishment has occurred because you do not have the money. If that's the case, consider borrowing from friends and family to pay it off and avoid recurrent seizures and penalties.

2

Request an offer in compromise if the IRS is the one garnishing your wages. This offer allows you to settle your debt for a fraction of what is owed but is only available to certain individuals and can be very complicated to complete. If you feel this may work for you, consider hiring a tax professional to help you collect the necessary information needed to make your case.

3

Establish a payment plan or work with a credit consolidation firm to manage your debt and create a monthly payment you can afford. Having a plan and consolidating also helps stop the calls from creditors and instantly ceases the garnishment as long as payments continue to be made.

4

Collect records showing your expenses and income and file with the IRS to prove that garnishment is causing you financial hardship. If the IRS grants you hardship status because you cannot pay your other bills, creditors will stop making collections via garnishment.

5

Set up an exempt bank account with a bank you do not owe money and transfer all exempt funds into this account. Exempt funds include Social Security benefits, railroad, civil service and military retirement benefits, and Veterans Affairs benefits.

6

Transfer your money to an account in a family member's name. Accounts not in your name cannot be garnished on your behalf. If you feel none of the other methods listed will work for you, consider having a family member set up a new account for you or adding your money to theirs. Make sure to work out a management plan to keep track of how much money you have and determine how you are able to access it when you need it.