When you borrow money from a creditor, you are expected to pay it back in full. If you default on your loan for one reason or the other, you trust your creditors to come for you. Creditors will adopt any legal means to ensure that you pay what you owe. They’ll increase your interest rate and introduce a late payment fee should you continue to stall payment. In the end, if you fail to fulfill your obligation, most creditors will sue you to garnish your account. But can your account be garnished without your knowledge?
In most states, a creditor can garnish your account without notice. If a creditor notified you before garnishing your account, you would have the opportunity to empty it. Worthy to note that creditors are required to notify you before contacting the bank to begin garnishment in some states.
Bank account or wage garnishment is often the last resort of all creditors, and this is due to the expensive nature of filing a lawsuit against a debtor. However, if your creditor gets lucky and acquires a writ of garnishment against you, you’ll surely not like how things will play out. Getting a notice before the garnishment is far better than being in the dark and discovering the development after it has been done. In this article, I’ll reveal if your bank account can be garnished without your notice. In addition, I’ll fill you in on what bank account garnishment is all about.
How Long Can a Bank Hold a Check by Law?
Can Your Bank Account Be Garnished Without Notice?
Having your bank account garnished by a creditor is one of the worse things that can happen to you. When your bank account is garnished, a creditor can legally remove money from your bank to settle your debt. The result? You might end up being broke, especially if all the money in your account is used to settle your debt.
If you owe a debt, and it seems like your creditor might sue you to garnish your bank account, you should take appropriate measures. But, before taking any step, you may want to find out if your bank account can be garnished without any notice from the bank. Of course, I have provided the answer in this article. But, before I reveal the detailed answer to you, let’s consider what bank account garnishment is.
What Is Bank Account Garnishment?
Bank account garnishment is the bane of all debtors. If your bank account is garnished, a creditor can legally remove money from your account to settle an outstanding debt. Unfortunately, bank account garnishment can be expensive. Thus, this plan is often the last resort of creditors after trying other easy means to compel debtors to pay what they owe.
According to law, a creditor is required to win a judgment to garnish your account. Put differently; the lender must file a lawsuit, which requires an attorney to deliver notice to both the debtor and the court.
Then, to start withdrawing money from a debtor’s account, the creditor needs an order or writ of garnishment signed by a court official. The IRS is the only creditor that can garnish a bank account without a court order.
Bank Account Garnishment Is Different From Wage Garnishment:
Having your bank account garnished is not the same as having your wages garnished. A court-ordered wage garnishment requires your employer to retain a specific amount of your paycheck and send it to your creditor. Because the deduction happens before your paycheck is cashed, this means your bank plays no part in wage garnishment. Creditors can garnish both your wages and your bank account simultaneously. But, this doesn’t always happen.
As soon as a garnishment is approved in court, the creditor will alert you before contacting your bank to start the actual garnishment. But, the bank itself isn’t directed by law to notify you when money is withdrawn due to an account garnishment. Although, you may receive an automated overdraft notification if the garnished amount is more than your available account balance. The notification of garnishment should be from your creditor and not your bank.
After your bank is alerted, it will need to adhere to the court order before considering any other transactions you have scheduled. In addition, federal law states that people who receive federal benefits will have their last two months’ worth of deposit scrutinized to see which one is exempt. Therefore, if you believe that a creditor may garnish your bank account, don’t hesitate to contact your bank and notify them of these transactions to ensure that those funds are well exempted.
What Do You Do When Your Account Is Garnished?
To remove the garnishment, you can try to contact the creditor to negotiate alternative payment options. You may be able to reduce interest payments, lessen the amount you owe, or make it a part payment for some time. But, you will have more bargaining power if you contact your credit before a judgment is made. It is in your best interest to stop to prevent an account garnishment from occurring in the first place.
You can also challenge the judgment in situations where the garnishment is made by mistake, is not well executed, or presents a huge financial risk to you. If you decide to go down this road, ensure you contact an attorney and act fast since you may have just five business days.
What Is Exempt From Garnishment in a Bank Account?
As stated, if you default on a loan for too long, your debtor will become impatient, and when he does, you trust him to come for his money. However, if your creditor discovers that you are too stubborn, he will adopt several techniques to compel you to pay what you owe. One of the common techniques adopted by creditors is bank account garnishment. But, before you get scared, you must note that not all your funds are subject to garnishment.
Funds exempt from bank account garnishment are Social Security disability and retirement benefits ( unless you owe child support, federal loans, or tax debt), Social Security Income, Temporary Assistance for Needy Families, Aged, Blind, or Disabled benefits.
Ensure you pay up your debt or negotiate with your creditor before he decides to sue you and garnish your wages or bank account.
