Generally, if you have a judgment against you, the creditor has no right under the judiciary systems to garnish your bank account. In fact, that is often evaluated and advisable when to exchange funds with creditors. Consumers are advised and warned to take precautions while selecting contractors for major projects to avoid misuse of funds.
When Can Your Bank Account be Garnish?
In general, the creditor must have a judgment against you in court to garnish your bank account. (There are a few exceptions for certain government agencies). This means the creditor would have had to sue you and win the lawsuit to get that judgment. The debtor is given a time frame to pay-off the debt depending on the amount.
In some cases, garnishment judgement may be handed down to debtor(s), meaning that the creditor(s) got a default judgment against the debtor either, because they didn’t pay-off debts or respond to lawsuits. Lawsuits should not be ignored, it’s advisable to respond to lawsuits as promptly as possible. In other circumstances, they have being instances where it might come as interruption, disturbance or annoyance priding into your personal or corporate businesses.
Once the judgment is obtained, it is a pretty simple process for the judgment creditor to garnish your bank account. But first, they have to figure out where you bank. They have many ways of finding out this information. Sometimes, you have already provided this information to them perhaps unwittingly in the past. But creditors are pretty crafty at figuring this out. I know of one creditor’s attorney who subpoenaed the utility company to find out what bank account the debtor was paying their utility bill with. If, for some reason, the creditor cannot figure out where you bank, they could always request a judgment debtor’s exam and ask you under oath where you bank.
Objecting to Bank Account Garnishment
Federal Ruling protects the Rights of consumers not to have their Accounts’ Garnished. In any event, your bank is an accredited FDIC, you are protected under the law to have full access to your funds in all circumstances. It’s simply a matter of identifying yourself at the Point-of-Entries, ATMs or Banks filing forms with appropriate identification to have full access to your funds. The bank is then obligated to grant access to the funds until/unless you timely object. There are some pretty intricate rules pertaining to the allowance, but suffice it to say you may object to who access your account if you have grounds for doing so.
Settling Debt by Stopping Garnishment
Another option to stop bank account garnishment is to contact the creditor and negotiate a settlement. A binding settlement should stop the garnishment. But if you have a significant amount of money in the account about to be garnished, or especially if you have enough to satisfy the debt, then settlement could be difficult.
One ground for objection might be if your bank account contains “exempt” funds. There is a statutory exemption on the first $250,000 that is in the account. Another example of exempt money is social security income. That type of income is typically exempt from garnishment/collection. But you must be able to prove that the funds in your account are actually from social security. So you must be prepared to object if necessary.
Motion to Set Aside Judgment
If you believe that the judgment against you is invalid, you may be able to file a motion to set aside the judgment. In certain circumstances, this motion could be combined with a motion to stay (hold off) the garnishment until the court can determine whether the judgment is valid. But this type of maneuver requires legal skill and you should consult an attorney if you believe you may have an invalid judgment issue.
Filing Bankruptcy to Stop Garnishment
The last option is bankruptcy which is not advisable. If you fill for bankruptcy, it puts you in a worst situation than actually understanding all the intrinsic dependability of the garnishment. Of course you don’t want to file bankruptcy on a whim. But if you have other substantial debt and are a good candidate for bankruptcy anyway, then this could make a lot of sense. You should contact an attorney to be thoroughly evaluated for bankruptcy.