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Bank Garnishments for Debt: What You Need to Know

Financial problems are among the most stressful situations you can encounter. If you are in debt to a creditor and you suddenly find no money in your account, chances are the creditor garnished your bank account to satisfy part of your debt. Sadly, bank garnishments are a common occurrence for those who are in debt. You may believe you can’t do anything about this.

Fortunately, you may be able to recover some or even all of the money. You have to move fast, and you may need to work with your attorney. Here are some things you need to know.

How Do Bank Garnishments Happen?

A garnishment is also referred to as a bank levy. This happens when a creditor sues you for your debt. The creditor files a lawsuit against you due to non-payment. If the creditor wins the lawsuit, they can move forward with the garnishment.

The judgment against you means the creditor can collect payment for your debt through liens on your property and garnishments of your bank accounts.

How Can a Creditor Take Your Money?

A creditor must serve your bank with a writ of garnishment. A writ of garnishment is a legal document that allows the bank to freeze the money in your bank accounts before it is sent to your creditor. The bank will freeze all the money in the account if you own the account, even if the money is not technically yours.

For example, if you have bank accounts in your children’s names, the creditor can levy those if you have joint ownership of the accounts since the kids are minors. Even though the money technically belongs to your children, the creditor can garnish the accounts to deal with your debt.

Is There Anything You Can Do?

After the levy moves forward, your bank should provide you with communication about the status of your account. Your creditor must provide you with the writ of garnishment. You have the option to file a claim of exemption with the court. This is a legal document that tells the court that any money in your bank accounts is protected from any creditors.

Once you file the claim, the court will set a date for your hearing to determine how much, if any, of your money is exempt from garnishment. An attorney is helpful if you plan to file this document.

Any exemptions you receive are based on the disposition of your money and where it came from. For instance, funds you receive from veteran’s benefits, student loan disbursements, and disability payments are exempt from garnishments.

However, the court has to go through your accounts to determine how much money came from each source. This is a long process if all of your money is held in one account.

Can You Prevent Garnishments?

Bank garnishments can continue until your debt is satisfied with your creditor. The creditor can garnish the bank accounts as often as necessary to ensure your debt is clear. To prevent this, you should remove any money from your garnished accounts, unless the account is 100% exempt, until you deal with the creditor.

To best prevent future garnishments, you either have to pay the debt in full or consider filing for bankruptcy. If you choose to file for bankruptcy, the debt will be clear and you will no longer owe the creditor. You can then resume using your bank account without fear of garnishment from the creditor.

Financial difficulty is stressful and is the cause of anxiety for many people. If you have any questions about bankruptcy or garnishments, please contact The Madden Law Firm for assistance.