Creditors Seeking Federal Benefits in Your Bank Account? Understanding Your Rights

If you receive federal benefits and have an unpaid debt, a creditor or the debt collector it hires may get a court order to try to take money from your bank account to pay the debt. The court order is called a garnishment. What’s important to know is that federal benefits ordinarily are exempt from garnishment. That means you should be able to protect your federal funds from being taken by your creditors, although you might have to go to court to do so...

Garnishments and Bankruptcy

What is a garnishment? A garnishment is basically a legal collections tool where a creditor obtains a court order compelling an employer to withhold a portion of an employee’s wages. The amount that can be withheld is capped at 25%, however, the percentage may vary depending on the state issuing the garnishment and the type of debt. The cap applies to all creditors, meaning 25% is the most that can be withheld at any one time. Garnishments, however, are not limited to wages and can involve one time garnishment of bank accounts or personal property.