Ordinary garnishments
Under Title III, the amount that an employer may garnish from an employee in any workweek or pay period is the lesser of: 25% of disposable earnings -or- The amount by which disposable earnings are 30 times greater than the federal minimum wage.
Wage Garnishments
The employer is required to withhold 25 percent of the taxpayer's gross wages. The wage garnishment remains in effect for subsequent pay periods until the total amount of the garnishment has been withheld and remitted by the employer.
Wages may not be garnished by more than one creditor at a time unless the primary garnishment does not take the full 25% allowed by law. (These garnishment restrictions do not apply to certain bankruptcy court orders or debts due for federal or state taxes.)
A levy allows the creditor to take funds directly from a bank account to satisfy unpaid debts or taxes. In most cases, levies are permitted only by court order as part of a lawsuit judgment. However, certain government agencies, including the Internal Revenue Service, can levy a bank account without a court order.
Debtors can protect their bank accounts by opening accounts in states that prohibit garnishments. If a creditor attempts to garnish the account, the debtor's funds remain protected while they handle legal proceedings or claims for exemptions.
Most states or jurisdictions have statutes of limitations between three and six years for debts, but some may be longer. This may also vary depending, for instance, on the: Type of debt. State where you live.
Bank accounts solely for government benefits
Federal law ensures that creditors cannot touch certain federal benefits, such as Social Security funds and veterans' benefits. If you're receiving these benefits, they would be exempt from garnishment.
If wage garnishment means that you can't pay for your family's basic needs, you can ask the court to order the debt collector to stop garnishing your wages or reduce the amount. This is called a Claim of Exemption.
EXAMPLES OF AMOUNTS SUBJECT TO GARNISHMENT
After deductions required by law, the disposable earnings are $368. In this week, 25% of the disposable earnings may be garnished. ($368 × 25% = $92).
You can stop it by filing a bankruptcy.
It must serve you in person, but it can also serve any adult living in your home, or it can leave the summons with your boss or human resources department. If you don't respond to the summons, the creditor is going to get judgment. Once it has judgment, it can start garnishing you.
There are several options for stopping a wage garnishment. One, you can quit your job. Your creditor won't get your money, but neither will you. Two, you can pay the debt in full.
They might also hire asset search companies that use public records and databases to locate accounts. In some cases, creditors can subpoena your employer for information about direct deposits. Once they identify a bank account, creditors can seek a court order to freeze or garnish it.
Normally, creditors need a court order to garnish your wages. But there are some creditors allowed to garnish wages without notification—these are the exceptions. Bigwigs like the IRS or the Department of Education can cut straight to the chase and grab your cash without a court's okay.
If after the money is taken from your paycheck, you can't pay for your family's basic needs, then you can file a "Claim of Exemption." A Claim of Exemption is a way to ask to lower the amount being taken.
Federal law limits how much judgment creditors can take. The garnishment amount is limited to 25% of your disposable earnings for that week (what's left after mandatory deductions) or the amount by which your disposable earnings for that week exceed 30 times the federal minimum hourly wage, whichever is less.
The bottom line. While debt collectors may not automatically sue over a $3,000 credit card debt, they have the right to pursue legal action if they believe it's a viable option.
Can debt collectors see your bank account balance or garnish your wages? Collection agencies can access your bank account, but only after a court judgment.
Debt collectors are not permitted to try to publicly shame you into paying money that you may or may not owe. In fact, they're not even allowed to contact you by postcard. They cannot publish the names of people who owe money. They can't even discuss the matter with anyone other than you, your spouse, or your attorney.
Even though your card issuer "writes off" the account, you're still responsible for paying the debt. Whether you repay the amount or not, the missed payments and the charge-off will appear on your credit reports for seven years and likely cause severe credit score damage.
Old (Time-Barred) Debts
In California, there is generally a four-year limit for filing a lawsuit to collect a debt based on a written agreement.