- Author: George Haines
- Published
Fewer things can throw your world upside down like having your bank account frozen. A bank garnishment or seizure is usually the result of a creditor attempting to collect after a court has issued a judgment against you. The court orders the bank to freeze your account and turn over its proceeds to the judgment creditor. The order is usually timed by the creditor’s attorney to take effect just before your paycheck is deposited. Seizing a bank account is generally a creditor’s first action because federal and state laws limit the amount that can be garnished directly from an employee’s paycheck. These limitations do not apply to cash money in a bank account.
Once your bank account is frozen, it is important to act quickly. You are entitled to protect some money from garnishment, but you must notify the court, the creditor, and the bank that you are asserting your legal exemption rights. Additionally, if you receive Federal benefits that are directly deposited into your bank account, the federal law will protect an amount equal to two months of these benefits. These benefits include Social Security benefits, Supplemental Security Income benefits, Veteran’s benefits, Railroad Retirement benefits, and benefits from the Office of Personnel Management. Federal benefits are exempt from garnishment, and the law places the burden on the bank to determine if the funds are protected.
Finally, a bankruptcy filing will immediately stop a garnishment and unfreeze your bank account. A debtor can often force the garnishing creditor to return money seized just prior to a bankruptcy filing. The general rule is that involuntary payments that amount to over $600 seized by a creditor in the 90 days before filing can be recovered.
If you have had your bank account seized, it is important to speak with an experienced bankruptcy attorney immediately and discuss your short term and long term options. Quick action is necessary to unfreeze your account, but it is also important to discuss your long term plan to avoid garnishments in the future. Your attorney can help you decide on a sensible plan to eliminate your debt and progress to a better financial future.
