The first thing to know is that in order to garnish your wages or take money in an account, a creditor MUST have a judgment in hand from a lawsuit. They don’t just get to take your stuff without a court order. A wage garnishment is an entirely different animal than a bank account garnishment (aka levy). Either one can be done and different mechanisms are used to get at your assets. Another way for a creditor to get paid is called a “till tap” — if a debtor is self-employed, the creditor provides a copy of the judgment to the sheriff, along with a writ (a legal instruction from the court) of execution, and the sheriff is directed to walk into the business, open the cash register (or a woman’s purse) and take all cash/checks/money in the business. One of my clients even had the Girl Scout cookie money taken from her troop (it was in her purse that day).
How does a creditor find out about these assets? When you open a bank account, most likely, the bank ran a credit report on you. Creditors have the right to look at your report and see who ELSE has looked at your report…..process of elimination if it is a bank that asked for your credit profile. When you filled out that paperwork for the bank account, utility service, car loan, you gave your employer information. That information is also available to creditors who look at your credit report.
Some funds in a bank account are exempt, depending on state law; some portion of wages is exempt under state law; even the cookie money was exempt if my client had come and talked to me about the matter — she didn’t until two years later and by that time, it was too late. If you are facing garnishment by your creditor, seek experienced legal advice quickly on what your specific rights are in your state.
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Last modified: October 10, 2007