Complete Guide to Bank Account Levy and Garnishment

It’s a nightmare scenario: You’re checking out at the grocery store or trying to gas up the car when your debit card refuses to work. You call your bank and discover there's no money in your account—because debt collectors took it.

Is this even legal? Or did someone overstep? Can debt collectors really take money from your bank account without an agreement from you?

The answer is sometimes yes. But except in cases of theft, your account generally won’t be emptied without warning. First, an entire legal process, including multiple steps, must take place. So don't fall asleep at the wheel. Get to know your rights over creditors and debt collectors, and be aware of any actions they're taking in pursuit of repayment.

Creditors and debt collectors can't just clean you out.

• There are limits on how much of your account they can access.

• Some accounts are protected from garnishment or levy, which means that money is off-limits.

• Certain income is off the table and can’t be taken to satisfy a debt. 

• Creditors must take proper steps and provide notice before they have the right to withdraw anything. 

Even so, you could lose some protections if you're careless, if you don't exercise your rights, or if you don't read your notices. Let’s take a closer look at what it means when debt collectors take money from your bank account and how you can avoid this situation.  

The Truth About Debt Collectors and Your Bank Account

Debt collectors might seem to be everywhere. Especially if you're getting calls at work, or your mom tells you a nice young man is asking how to get hold of you, or a collector pops up in your texts or on social media. But they're not psychic. Even if they were, they don't get unlimited, free access to your accounts or your information. 

Can debt collectors check your bank account without permission?

How would a debt collector or creditor even know where you bank? The obvious way would be to sue you and request that the judge order you to provide that information. And there are other ways:

• If you've written a check to them or the company that hired them, they probably have your bank and account number.

• If your credit report shows auto loans, a mortgage or credit cards tied to a bank, you might also keep your checking or savings account there. It's another clue.

• If you bought property, public records show the closing documents, which could have banking information. 

You might be surprised that it's perfectly legal for your bank to collect and share your private information. The fact is, banks and credit unions are allowed to collect information like your income and credit card purchases and share it with third parties like service providers and retailers. 

However, the privacy rule of the Federal Deposit Insurance Corp. (FDIC) prevents banks from disclosing an account number or access code for credit card, deposit, or transaction accounts in most situations. 

Banks are allowed to disclose information:

• That’s publicly available, like your phone number or address, as long as the bank has a reasonable belief that the information can be lawfully obtained from a public source.

• Necessary for normal bank operations—for instance, to affiliated companies or third-party vendors who help service your account or provide related services.

• To comply with legal requirements like valid court orders, subpoenas, or the requirements of federal, state, or local laws.

• To prevent fraud or unauthorized transactions if necessary to protect against potential fraud or unauthorized activity.

• When you consent, including partial opt-ins where you can choose what information you want to share.

• To law enforcement in connection with suspected criminal activity, but usually this is limited and requires procedures to be followed.

These are the laws that mainly apply to banks and the information they collect: Gramm-Leach-Bliley Act (GLBA). This law governs how financial institutions can use and share your personal information. It also says that financial institutions can't share important information like Social Security numbers.

Right to Financial Privacy Act (RFPA). This act protects your financial records from improper disclosure to federal government agencies. You generally will receive notification and an opportunity to object before the government can access your records.

Bank Secrecy Act (BSA). This law requires banks to design and use programs that prevent and detect money laundering. This includes record-keeping, reporting, and suspicious activity monitoring.

In short, debt collectors can't just contact your bank and take your money. They can't even get information about your account balance or transaction history. Federal law lets your bank disclose very limited information to other companies. But if a debt collector wants info or access, it has to file a lawsuit against you—and it has to win. 

The legal process required for garnishment

Some types of debt are more likely to lead to garnishment. They include:

• Unpaid personal loans or credit card balances

• Child support

• Back taxes

• Federal student loans

• Alimony

In most cases, before a creditor or debt collector tries to garnish your bank account, it has to go through a multi-step process that could look something like this: 

The debt collector sends you a demand letter or notification that it intends to sue you. The Fair Debt Collection Practices Act prevents a debt collector from threatening action it doesn't plan to take, so an intent-to-sue letter should be taken seriously. If you receive one, consider trying to negotiate the debt. 

The debt collector files the lawsuit. You'll receive a complaint, which is a document that explains why you're being sued, and a summons, which tells you where, when, and how to respond to the lawsuit. This is a great time to talk to an attorney if you haven’t already. It's crucial to respond as directed in the time allowed—generally about 30 days, but your case may vary.

If you don't respond to the complaint or show up for court, the debt collector gets an automatic win. This is known as a default judgment. You have forfeited your right to tell your side or to make the collector prove you owe the debt or that it's still collectible. It's very difficult to come back from a default judgment. The debt collector gets the same rights to collect as with a judgment won after a trial.

The debt collector has to win the lawsuit to collect. You could have a decent chance in court if you fight back, but let's assume that you lose. The debt collector becomes a judgment creditor. The debt collector then requests a garnishment order from the judge. At this point, the debt collector can request an order, called a writ of garnishment or garnishment order from the court. 

The judge issues a writ of garnishment. This court order gives the debt collector permission to take money from your bank account (or paychecks).

The writ of garnishment is served on the bank. The bank must comply and release the funds to the judgment creditor. 

Note that a debt collector has to follow all these steps before they can get access to your bank account. Without a garnishment order, any attempt to pull funds from your bank account is illegal.

Your rights under the Fair Debt Collection Practices Act (FDCPA)

The FDCPA governs the practices of debt collectors, not original creditors like your credit card issuer or personal loans provider. The FDCPA doesn’t directly address access to bank accounts, but it prohibits abusive tactics that could lead to gaining access, such as:

• Contacting you at unusual or inconvenient times without your permission

• Harassment, threats, obscene language

• Disclosure about the debt to third parties

• Making false or misleading statements

• Using unfair practices to collect

In addition, the collector must allow you to:

• Validate the debt to make sure that you owe it and that it's collectible

• Dispute the debt

• Opt out of electronic communication

• Have the collector deal with your attorney and not contact you

There are time limits for collecting debts, called statutes of limitation for debt. These limits generally range from two years to 15 years, depending on where you live and the type of debt. Once the statute of limitations is past, the debt is said to be time-barred and you can’t be pursued for payment. 

That doesn't mean you won't be contacted. That's why it's important to validate any debt when you're contacted. You could accidentally restart the clock on the statute of limitations (and give the creditor more years to legally collect) if you make a payment or discuss the debt before you know what you want to do. If your debt is a few years old, figure out whether it's still collectible before taking any action at all.

You have the right to report a debt collector that violates the FDCPA. The Federal Trade Commission (FTC) is charged with overseeing debt collector actions and ensuring that the FDCPA isn't violated. You can contact the FTC with your complaint.

Another option is the Consumer Financial Protection Bureau (CFPB). However, in 2025, the CFPB has been downsized by 90% and may not be taking action against abusive debt collectors. You can submit an online complaint with the bureau. 

You could also sue a collector that violates your rights under the act in your state court. If you prove that the debt collector violated the FDCPA, you have the right to ask for $1,000 in statutory damages and possibly more if you suffered harm from the violations.

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Special Circumstances: When Court Orders Aren't Required

Some creditors don’t have to sue you or get a court order to take money from your bank account. 

Government agencies with direct access

These agencies only have to inform you of their intent to garnish (or levy) your deposits. They may also be able to freeze your bank account without a court order for financial obligations like unpaid child support. 

• The Internal Revenue Service can issue a levy on bank accounts to collect unpaid taxes.

• State departments of revenue or taxation can issue bank levies for delinquent state taxes.

• State child support enforcement agencies can garnish wages or bank accounts to enforce child support obligations without a court order.

• The Department of Education can garnish wages or levy bank accounts for defaulted federal student loans.

Your bank's right of offset

Your own bank or credit union could seize money from your account. If you’re behind on a loan with the same bank or credit union, they could take money from your account to cover delinquent payments. The legal term for this is right of offset or right of setoff. 

Typically, this right applies to installment loans or mortgages, but not credit card debt. When you open a bank or credit union account, the right of offset is spelled out in the account agreement you sign. Banks or credit unions might even be allowed to apply the right of offset to a joint account that you have with someone else.

Credit unions might have more freedom to garnish your account in this way than banks. For instance, credit unions might be able to take funds for past-due credit card debt, but a bank wouldn't be able to. 

Joint account considerations

If you have a joint account with someone who might be subject to garnishment, it’s probably a good idea to remove your own money. Most states allow garnishment from joint accounts when one of the account holders is subject to garnishment. But there are potential loopholes:

• In some states, creditors can't take more than half the funds in a joint account. In other states, creditors may be able to garnish the entire joint account. 

• It may be possible to fight garnishment in a joint account if the non-debtor can prove how much money is theirs, or that the account was for their convenience and not the debtor’s. For instance, elderly parents who added their adult child to an account to take care of business for them could push back against garnishment for the child’s debt.

• State laws vary a lot about how much a creditor can take from accounts owned by spouses. This depends on how you legally share property and debt with your spouse.

• In community property states, a creditor can garnish a joint account held by both spouses. They may also be able garnish funds held by the non-debtor spouse in a separate account. However, there are many exceptions to this and they vary by state.

• Some states allow tenancy by the entirety of property ownership. That means a creditor can't garnish any account, whether joint or separate, in the non-debtor spouse's name. 

These legal details are complex, and it’s a good idea to get advice from an attorney who’s licensed to practice where you live.

Protected Income and Exempt Funds

Your savings isn’t entirely up for grabs, even with a writ of garnishment. The law tries to be fair to creditors without leaving consumers destitute. Here are the types of income and savings that are protected under federal law:

• Social Security benefits

• Supplemental Security Income (SSI) benefits

• Veterans’ benefits

• Civil service and federal retirement and disability benefits

• Servicemember pay

• Military annuities and survivor benefits

• Federal student aid

• Railroad retirement benefits

• Financial assistance from the Federal Emergency Management Agency (FEMA)

In addition, some states protect a set amount in a bank account, no matter where the funds originated. For example, Massachusetts protects $2,500. Other state laws exempt amounts ranging from a couple of hundred dollars to a few thousand dollars. Generally, state protection isn't automatic, so you'll need to take action to exempt that money. 

You have limited time to take action to protect exempt funds. In California, for instance, you get 15 days to file a Notice of Exemption with the court, or your bank will release the money to the judgment creditor. It's up to you to assert your rights. You don't have automatic protection.

The two-month rule for protected funds

If you have exempt (protected) funds, you generally get to keep up to two months’ worth.

When a judgment creditor gets a writ of garnishment, a copy will be delivered to your bank. Your bank then has two business days to review and identify your accounts, and to determine if the garnishment order is to collect child support, federal taxes, federal student loans, alimony, or restitution to a crime victim. If so, the bank may freeze funds that come from a protected source. 

If the garnishment isn't for any of these reasons, the bank must review your account history for the two months before they received the garnishment order. This is the look-back period. Typically, up to two months’ worth of exempt income is protected. This protection is automatic if you use direct deposit to get the money into your account or prepaid debit card. If you receive protected income another way, such as by paper checks, it’s still protected. But you have to file paperwork to get the protection. 

Non-exempt funds will be frozen, and the bank will notify you of the levy.

The bank must review each of your accounts separately. If you have money in an account that doesn’t contain direct deposits of Social Security funds, the bank can't protect these funds—even if you transferred some of your direct deposit Social Security funds into that account. It's smart to avoid moving exempt money around if a garnishment could be in your future.

Here's an example of how transferring money can hurt you in a garnishment situation. A married couple, David and Lily, receive Social Security payments totaling $3,200 each month into a joint account by direct deposit. But Lily transfers her funds, $1,800, into a separate checking account. 

A debt collector sues them both, wins a judgment, and serves their bank with a writ of garnishment for $5,000. Their joint account has $2,000, and Lily's checking account has $4,300.

• The bank performs a two-month look-back on their joint account and could automatically protect up to $6,400, or two months of their Social Security income. So the entire $2,000 account balance is exempt.

• However, Lily's account isn't protected. If she hadn’t transferred her Social Security income, it would have been protected: their total balances equaled $6,300. That’s $100 less than two months of exempt deposits. Instead, her account is frozen and she must quickly claim the exemption, file paperwork with the court and document the money transfers. If she fails to do so, her balance could go to the debt collector.

The bank isn't allowed to trace directly deposited funds to other accounts. You must file exemption requests quickly to protect any funds that the bank must freeze but that you believe are protected.

State-specific exemptions

The amount you can protect from garnishment depends on where you live. Some states are much friendlier to consumers than others. Delaware, for instance, doesn't allow bank account garnishment for most debt. But many states either don't list any special protection from bank account garnishment, or their protection is $2,000 or less. 

Here are some of the most generous states when protecting bank account funds from garnishment:

• South Carolina $5,000

• Maryland: $6,000

• South Dakota: $6,000

• North Dakota: $7,500

• New Hampshire: $8,000

To find your state's exemption, you can contact your state's legal aid society, ask an attorney, or perform an online search for "bank account garnishment exemption" for your state. 

You'll have to be proactive to claim a state exemption. They're not typically automatic, like most federal exemptions. This means filling out an exemption form and filing it with the court. The form will likely be called something like "request for exemption" or "exemption claim."

Warning Signs and Notification Requirements

If you’ve fallen behind on debts and haven’t shown up for court dates, a garnishment of your bank account may not be a total surprise. But even if you have no idea that your bank account is about to be garnished by debt collectors, you might have one more chance to find out about it before it happens. 

Understanding garnishment notices

If a court issues an order to garnish your bank account, there are some situations in which the law says they have to notify you:

• If sometime during the past two months, you received payment of federal benefits that are protected from garnishment, and

• You have other money in your bank account that's not automatically protected

The notice should include details such as: 

• Creditor 

• Type of debt 

• How much you owe 

• What financial obligation the garnishment will fulfill (such as unpaid taxes, student loans, child support, alimony) 

• Instructions on how to dispute a garnishment: where to file, deadline to file, and what information to include 

The bank might also send you a court order. Banks sometimes have to do this to follow federal or state laws. You can also ask your bank for a copy of the garnishment order, or reach out to the creditor or court for more details. 

What happens after a garnishment order?

When a bank gets a garnishment order, it freezes your account right away. You may not get notice from your bank, depending on your state. 

Here’s guidance from Minnesota: 

Within two days of receiving the Garnishment Summons, the bank should send you a garnishment notice, instructions, and two copies of an Exemption Form. You won't receive notice of the garnishment until after your funds are frozen. 

You won't have access to your money while it’s frozen. This may mean that your checks may bounce, and you may incur overdraft charges during this time.

The notice California sends out has space for your name, the amount and what it's for, and what's being taken (property or money). On the reverse, the form provides some guidance about deposit accounts and how to claim an exemption. Your notice may just be a page with fill-ins and checkboxes. 

You won't lose access to funds that are automatically exempted, like two months of direct-deposited Social Security. You may have to claim other exempt funds by completing an exemption request. A California form requires you to state why your money is exempt and include the section of the law that applies. 

The bank will need to determine if your money is exempt or not. If it is, the bank will notify the creditor and the money will eventually be returned to you. The bank will have about 21 days to determine if your money is exempt or not. 

You have some rights when your account has been frozen. They include:

• Banks must notify you of the freeze and tell you why it happened.

• You can argue against the freeze if you think it's a mistake, too much, or unfair. You can also give proof to support your case.

• You get to exempt some funds like Social Security, unemployment benefits, or child support.

• You have the right to legal representation and to consult a lawyer if the freeze is tied to debt collection or legal action.

It can take weeks to get an account unfrozen. Here's a potential timeline:

• Two weeks. Contact the bank and engage an attorney

• Two to six weeks. File with the court to lift the freeze, negotiate a settlement or payment plan with the creditor or address any disputes or errors.

• Two to four weeks. It can take the bank two to four weeks to unfreeze your account.

Red flags that garnishment may be coming

If your creditors have stepped up collection efforts, you may be very close to getting your bank account garnished. 

• A debt collector that says it plans to sue you is absolutely going to—they're not allowed to make empty threats. 

• Once they file a lawsuit, you may have 30 days or less to respond to the summons and complaint you receive.

• If you fail to respond or don't appear in court, your creditor gets an automatic win and your bank account could be frozen in weeks—or days. 

A typical timeline for the entire process might include:

• Six months of missed payments for an account to be written off or sent to collection, but it may happen sooner. 

• Weeks to months for a creditor to get you into court once it decides to sue. Lawsuits are more likely when large amounts are owed. 

• Potentially more weeks to obtain a writ for bank garnishment and serve your bank after the creditor wins the lawsuit. In some places, the creditor can apply for the writ before going to court, and in that case they just have to serve your bank.

• Your bank may freeze your account immediately when it's served.

Proactive Strategies to Prevent Bank Account Garnishment

If you have reason to fear bank account garnishment, take steps now to prevent it.

Address unpaid debts before court action

If you’ve fallen behind on your bills and have unpaid credit card debts or other overdue debts, it’s easy to feel overwhelmed. You can treat this moment as an opportunity to improve your financial life. 

Staying in contact with your creditors (even if your overdue debt is in collections) could help you get a better outcome. Many creditors don’t want to go through the time and expense of taking you to court. Debt collectors are often willing to work out a plan for your debt that leaves everyone satisfied. Communicate and document your financial hardship, and ask for what you need.

Understanding and responding to legal notices

A debt collector isn't generally required to tell you before it files a lawsuit, but it often will. However, you might be surprised with a summons and complaint. Read these forms carefully. They tell you that you're being sued and for how much. You'll also be instructed about how, when, and where to respond to a lawsuit. 

The most important thing about responding to these notices is that you do it, and do it on time. Ignoring notices means giving up valuable rights and probably money. The worst thing you can do is fail to show up at your court date. That gets your creditor a default judgment and possibly the right to grab money from your bank account. Usually, you get 21 to 30 days to file a response, but it depends on where you live. You'll have the information you need. Just follow instructions.

If you need legal help and can't afford a debt lawyer, assistance may be available:

• Legal aid programs such as Legal Services Corporation, Lawhelp.org, or a local legal aid office

• Pro bono programs from the American Bar Association or local law schools

• Other resources like senior services, veterans services, credit counselors, and debt counselors

Banking strategies to protect your money

To stop debt collectors from garnishing your bank account, learn your rights, and take these steps: 

Make sure your exempt money is direct deposited to an account or prepaid debit card for automatic protection. Otherwise, you'll have to document the source of funds you want to exempt, and that may involve submitting copies of:

• Benefit statements (Social Security, disability, veterans benefits, and so on) 

• Pay stubs 

• Bank statements showing deposits and withdrawals 

• Government benefit award letters 

• Pension or annuity statements 

• Insurance statements

Avoid keeping large amounts of unprotected cash in bank accounts. Set up a separate account for exempt funds such as Social Security, child support, or disability benefits. Don't transfer them to another account or mix them with other funds. 

If your creditor knows what bank you use (for example, you have loans with that same bank or you’ve written checks to your creditor from that account), open another account and move your money—to an online account‌ or even a prepaid debit card that's harder to track down. An online account doesn't protect your account from garnishment if it's located. You'll still need to protect exempt funds.

To protect your exempt funds, open an account that creditors can't touch. In a few states, a creditor can’t garnish a jointly held bank account. (If both spouses owe the creditor, there's no protection.) Some states have specific laws about protected deposits. Some don’t allow debt collectors to garnish wages at all for consumer debt. The amount of  money and property that’s exempt from garnishment has varying limits. It’s worth it to check the laws in your state.

If Your Account Has Already Been Garnished

If you suddenly lose access to your money, your account may be frozen, or a garnishment may have already taken place. The faster you act, the better your chances of protecting exempt money or recovering funds garnished in error.

Immediate steps when you discover garnishment

The first thing you need to do if you can't access funds or if money has gone missing is to contact your bank. Call the customer service department or visit your branch. Stay calm. 

• Request a copy of the garnishment order to find out which creditor is garnishing your account and why. 

• Check the court records for details, if you skipped your court date.

• Determine if any of your funds are exempt from garnishment (check your state law).

• File an exemption claim if you're entitled to one and still able to do so. 

• If you think the garnishment is in error or excessive, you may be able to challenge it in court. Verify that you're within the deadline to do this.

• Seek legal advice if necessary.

• Try to negotiate a payment plan with your creditor. 

• Consider bankruptcy to take advantage of the automatic stay, which can stop garnishment, at least temporarily.

If the garnishment is in error—for example, exempt funds were taken—you can file to reverse the garnishment. A reversal could happen quickly if you file in time and the creditor doesn't object. In Minnesota, for example, the bank releases your funds within six days. If the creditor objects, you may have to attend a hearing. 

Legal options to contest garnishment

Your first line of defense is your exemption, if applicable. Exempt income is money that can't be garnished. Your bank should have sent you the form and instructions for filing it with your notice of garnishment. File the correct paperwork in the time allowed. An exemption won’t help you keep your money if you don't make your claim in line with the court's requirements. Seek legal help if you don't understand how to file. 

If you've missed your window or your bank has allowed the garnishment of exempt funds, you may be able to contest it and request an emergency hearing. The filing will be called a Motion to Stay Garnishment, Emergency Motion to Claim Exemption, or something similar. 

If your creditor received a default judgment because you missed your court date, you may be able to file to vacate the judgment. Acceptable reasons to vacate a judgment include:

• Excusable neglect

• Fraud

• Void judgment

• Enforcement would be unjust

• Improper service of the creditor’s lawsuit

• Any other reason to justify relief from the judgment 

Once garnished funds have been released to the creditor, getting them back can take weeks or months. It's always best to act quickly and stay on top of your dates and any deadlines.

Negotiating after garnishment begins

Negotiating debt after a garnishment order has been served isn't easy, but it's possible. Expect to have better luck if most or all of your deposits are exempt from garnishment, or if the amount in the account is small compared to the amount owed. Once a debt collector sees how little money is available to pay the judgment, they may be more likely to work with you. 

This negotiation isn't that different from negotiating a settlement before a lawsuit or garnishment. You'll need to determine how much you can afford to pay and decide what you want: a payment plan, debt forgiveness, and so on. Then you or someone working on your behalf can contact the creditor and try to reach an agreement. Once you've paid the agreed-on amount, the creditor should release you from any remaining balance and report that to the credit bureaus.

If the creditor isn't willing to negotiate with you, can you file bankruptcy to stop or reverse a bank garnishment? Bankruptcy creates an automatic stay, which temporarily stops collection efforts, including garnishment. Once you file, a garnishment that happens afterwards can be reversed. Can a garnishment that takes place before filing be reversed? In many cases, yes. If the garnishment took place in the 90 days before filing and the money would have been exempt from seizure in a bankruptcy, the court may reverse the garnishment and return the money to you. 

How Freedom Debt Relief Can Help Before Garnishment Occurs

Garnishment, lawsuits, and other collection tactics can be scary, and exercising your rights can be complicated. (All of those timelines, forms, and statutes.) One way to avoid those issues is to stay in touch and try to work something out. Creditors don't generally enjoy going to court or paying to file lawsuits to get judgments they might not be able to collect. 

If you're not comfortable negotiating with creditors, Freedom Debt Relief's trained debt counselors and negotiators can take the load off your shoulders and help you keep the conversation going with debt collectors. 

Being proactive about your debt before your creditors file lawsuits can provide peace of mind. At Freedom Debt Relief, if a creditor takes legal action against you for an enrolled debt, we may engage a Legal Partner Network attorney who will attempt to negotiate a settlement. This service is free for qualifying clients who have made their monthly deposits on time. The offer doesn't apply to legal action taken before you enrolled  or on debts that aren't enrolled.

So if debt collectors have you and your bank account in their sights, contact one of our debt counselors for friendly, professional help with your debt. You won't have to pay debt settlement fees unless you reach a deal that you like and pay the creditor the amount you agreed to.