Can Creditors Garnish Both Paychecks & Bank Accounts?

When debt is owed to a creditor, he has the option of taking legal action you, including the garnishment of your wages. A garnishment is a judgment that is ordered by the court, and can only be reversed by the court. When a creditor chooses to take funds from your paycheck, as well as your bank account, it can leave you in a financial bind. Depending upon the circumstances of the garnishment, you may be able take action.

Can They?

There is no law that prevents creditors from garnishing both paychecks and bank accounts. Therefore a creditor is allowed to do it. Once an employer receives a garnishment request, he is obligated to withhold funds from your paycheck. If a judge orders the garnishment of your bank account, your bank will "freeze" all funds in your account. This is a shocker to you, in that you are not notified of the freeze until after the account has been frozen.

Non-Garnishable Funds

If you receive paychecks from the government, such as unemployment, Social Security, public assistance, veteran or retirement benefits, those funds are exempt from garnishment. If you have a bank account that contains money from government sources, those funds are untouchable. For this reason, it is wise to have a separate bank account, specifically for depositing income from the government. If you mix government income into the same bank account with your other income, you have the burden of proving which funds are not garnishable.

Garnishment Limits

By law, there is a limit on the total amount of income a creditor can garnish from you. The federal limitation on garnishments is up to 25 percent of your disposable weekly income. This means that the garnishment totals from your paycheck and bank account combined cannot exceed 25 percent. There are a few exceptions to this rule, such as overdue taxes, child and spousal support. Some states have their own laws that supersede the federal law. Check the garnishment laws specific to your state.

Take Action

If a creditor garnishes exempt paychecks or exceeds the allowed garnishable amounts, take action. Visit the "Small Claims" court that issued the garnishment order. Complete an Exemption From Garnishment form. Attend a hearing to prove to the court that the creditor is taking more than the legal garnishable amount (if applicable). Present a copy of bank statements to prove that the creditor is garnishing from government-issued paychecks. At the hearing, a judge decides whether or not the garnishments cease or continue. For ungarnishable funds, the judge can order that the funds be restored to you or your bank account.