What Can They Garnish for Credit Card Debt?

Credit card debt can cause a person an enormous amount of stress. If a person is late paying his credit card bill, the credit card company will often add penalties to the principal of the loan and hike his interest rate. If the person is delinquent in his debt long enough, the company may undertake a garnishment of the person's wages, which can be accomplished through a lawsuit.

Garnishment

To garnish a person's wages -- that is, to forcibly seize a portion of the person's paycheck until the debt has been paid up -- a credit card company is required to get the permission a judge. This can only be done if the credit card company files a lawsuit, usually alleging breach of contract against the debtor. If it wins, the company may be allowed to approach the debtor's employer with a garnishment order.

State Laws

Many states have laws that restrict both who can have their wages garnished and what sources of income are eligible for garnishment. For example, many states require a debtor to pass a test of financial assets and income, known as a means test, before a private creditor can step in and take his paycheck. Often if a person is supporting dependents he will be protected from extensive garnishment.

Federal Laws

The federal government protects various streams of income from garnishment by private creditors. This includes most federal benefits, such as Social Security benefits and federal student loans. In addition, the government prevents a large portion of a person's paycheck from being garnished. Generally, a maximum of 25 percent of a person's income can be set aside by employers and provided to the debtor's creditors.

Bank Account Freezing

Sometimes, garnishment is confused with the freezing and seizure of a person's assets in a bank account. This process is similar to garnishment, but different. When a bank account is frozen, the account holder's access to it is restricted. The creditor will often be able to take money out of the account. By contrast, garnishment involves the siphoning of money from a paycheck. Both state government and the federal government have laws that protect certain people and certain assets from freezing and seizure. Most states have means testing for individuals, while the federal government prevents most of the sources of income that it protects from garnishment from freezing and seizure as well.