Exempt Property: This article explains how garnishment works as a way to get money for debts that have already been decided.
Here, learn about garnishment and how it works in Texas. Garnishment is a process that creditors use to collect debts, often requiring a lawsuit and court judgment. Banks or employers may freeze funds without prior notice, but certain types of property, such as wages and benefits, are protected from being garnished.
Garnishment is a process that creditors use to satisfy debts that you owe. Typically, a creditor must have filed a lawsuit against the debtor and won a judgment. After winning the judgment, the creditor will file a separate court case against a third party (also called a “garnishee”) who has your money and ask the court to issue a writ of garnishment. Most of the time, the garnishee is your bank or, sometimes, your employer. You tell the garnishee about the judgment and ask them to freeze your funds so the judgment can be paid. This is done with the writ of garnishment.
Having your wages or bank account garnished can add more financial stress to an already difficult situation. Garnishment is when a creditor obtains a court judgment allowing them to withdraw funds from your bank account or paycheck to pay off a debt you owe. If you find yourself facing garnishment, there are steps you can take to stop it and regain control of your finances.
What Is Garnishment?
Garnishment is a legal process that creditors can use to collect on debts that you have failed to pay. It allows them to take money directly from your wages or bank accounts, even if you depend on that income. This forced redirection of your funds happens after the creditor files a lawsuit and wins a judgment against you in court.
Once the judgment is entered, the court issues an order of garnishment. This is sent directly to your employer if it’s a wage garnishment, instructing them to withhold a percentage of your pay and send it to your creditor For bank account garnishment, the order goes to your bank, allowing them to freeze your account and/or make withdrawals to pay down the debt
How Bank Account Garnishment Works
If a creditor obtains a garnishment order for your bank account, the bank must freeze your funds. This prevents you from withdrawing or accessing the money, ensuring it remains available to satisfy the debt. The amount the creditor can take depends on state law and the type of debt:
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Commercial debt: Creditors can garnish all funds in your account except protected income like Social Security.
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If you are more than two weeks behind on your child support payments, up to 60% of your money can be taken away.
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Back taxes: The IRS has limits based on your tax filing status and number of dependents.
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Federal student loans Up to 15% of disposable income can be garnished
9 Ways To Stop Bank Account Garnishment
If your bank account has already been frozen due to a garnishment order, you have several options to get your funds released and avoid further garnishments.
1. Pay Off The Debt
The simplest way to stop garnishment is by paying off the debt in full. This eliminates the creditor’s grounds for taking your money. Consider borrowing from family or friends or taking out a debt consolidation loan if paying it off upfront isn’t feasible.
2. Enter Into A Payment Plan
Your creditor may agree to a payment plan to avoid the legal hassle of garnishment. This allows you to pay back the debt over time while maintaining access to your account. Make sure the payments fit comfortably within your budget.
3. Request A Court Hearing
You can fight the garnishment by asking for a hearing and putting in an objection. Some reasons could be the wrong amount of debt, bad reasons for garnishment, or the fact that the funds are not subject to garnishment.
4. File A Claim Of Exemption
Some types of income, like Social Security, disability benefits, and child support, can’t be taken away. File a claim of exemption to protect those funds. You can also say that the garnishment makes it hard to pay for basic needs.
5. Get Legal Help
Consult an attorney experienced in debtor/creditor law. They can review the garnishment order, determine if any violations occurred, and help you file any petitions or claims to halt the garnishment.
6. Seek Credit Counseling
Credit counseling from a non-profit can help you make a budget and can talk to your creditors about affordable payment plans or lower settlement offers. This can eliminate the garnishment risk.
7. Change Banks
Closing your garnished account at one bank and opening a new account elsewhere stops the existing garnishment order. Be cautious about depositing any protected income sources.
8. File For Bankruptcy
Filing for Chapter 7 or Chapter 13 bankruptcy stops garnishment and provides other debt relief. The court can discharge many debts or establish a structured repayment plan. Consult a bankruptcy attorney beforehand.
9. Avoid Bank Accounts
Stashing cash or only using prepaid debit cards eliminates the risk of account garnishment altogether. This strategy makes managing finances more difficult, however. Weigh the pros and cons.
How To Rebuild Finances After Garnishment
Dealing with a garnishment often results from broader financial hardship. Once you’ve taken immediate steps to halt the garnishment, focus on rebuilding your finances to avoid future issues. Useful strategies include:
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Finding ways to increase your income through a side gig, promotion, or new job.
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Creating a realistic budget that aligns expenses with your income.
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Establishing an emergency fund with 3-6 months’ worth of living expenses.
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Getting a secured credit card and using it responsibly to rebuild your credit.
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Paying all bills on time going forward. Set up autopay if it helps.
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Monitoring your credit through a free service like Experian to catch any reporting issues.
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Consulting a credit counselor or financial advisor for guidance and support.
Recovering from garnishment takes time, but staying organized and focused will help you bounce back. Don’t hesitate to seek assistance from legal, financial, and credit experts when needed either. With diligence and patience, you can take control of your finances once again.
What property is protected from garnishment?
Both Texas and federal laws have set limits, called “exemptions,” that means certain types of property cannot be taken through garnishment. Exempt property includes things like:
- No child support, spousal support, alimony, or federal debts should come out of your wages.
- Benefits from the Social Security Administration, such as Social Security Retirement, SSI, and SSDI
- Veterans Administration benefits
- Railroad Retirement Board benefits
- Office of Personnel Management retirement benefits
- FEMA disaster benefits
- Workers’ compensation benefits
- Unemployment benefits
- Child support, alimony, and spousal support
- 401(k) and IRA plans, pension plans, and other retirement savings plans
- Temporary Assistance for Needy Families (“TANF”) funds
- The money you get when you sell your homestead (for up to 6 months after the sale).
Other personal property can be protected up to an amount of $50,000 for an individual (or $100,000 for a family), including items such as:
- personal services that don’t get paid for (up to $12,500 for an individual or $25,000 for a family)
A full list and more information about these exemptions can be found in Property That Can Be Protected from Judgment Creditors.
Can my paycheck be garnished?
Your paycheck cannot be garnished from your employer to pay consumer debts or other types of debt judgments. See Texas Property Code, Chapter 42. Under Texas law, your paycheck (or “current wages”) can only be garnished to pay child support, spousal support, alimony, and certain federal debts (like income tax debt, other IRS debt, or federally-backed student loan debt).
Once you deposit a paycheck into your bank account, it is no longer considered current wages and can be garnished from your bank.
How to Stop a Wage Garnishment in Less than an Hour!
FAQ
How do I protect my bank account from a judgement?
There are four ways to open a bank account that no one can touch: (1) use an exempt bank account; (2) open a bank account in a state that doesn’t allow it; or (3) use an exempt bank account.
How can I stop a payment being taken from my bank account?
Most banks allow you to sign in to your account online or through your bank’s mobile app to request a stop payment. Find a tab that may say “Bill Pay” or “Pay My Bills. ” Here you’ll be able to edit or cancel any scheduled payments you have. Select the payment you want to modify and apply the changes.
How to stop bank account garnishment?
You can stop a garnishment by:Paying off the debt in full. Filing an objection to the garnishment with the court if you have legal basis, such debt was a result of fraud or identity theft. Filing for court protection and debt resolution through Chapter 13 or Chapter 7 bankruptcy.
How do I stop creditors from freezing my bank account?
If someone levies your account, you might be able to fight it or quickly settle it. Review the debt. Pay the debt. Negotiate with the creditor. Check the statute of limitations. Contest the lawsuit. Open a new bank account. File for bankruptcy.