How Long Does it Take to Garnish a Bank Account?

It might shock you that creditors can take money from your bank account. But they can. This article covers how creditors and debt collectors can access your bank account, how long it takes to garnish a bank account, and what you can do to protect yourself from bank account garnishment. 

When Can Debt Collectors Garnish Your Bank Account?

When can debt collectors take money from your bank account? To garnish your bank account, a person or company must show that you owe them money and that you can't or won't repay the debt in the way you agreed. 

You are the "debtor" when you owe money, and the lender is the "creditor." Sometimes, a debt collection agency will act on behalf of your creditor. 

But no creditors (except a few government departments, most often the IRS) can just tell your bank to freeze your account(s) and pay your money, including future deposits, to them. First, they must apply for a court order and obtain a judgment. 

That court judgment will legally compel your bank to comply with its garnishment orders. And there's no point pleading with your bank to help you out. It simply and absolutely can't.

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Garnishment vs Bank Account Levy

According to legal website NOLO, we're using the wrong word when we talk about "garnishing" a bank account. It says, "For the most part, levies apply to your financial accounts, and garnishments apply to your wages."

So, technically, we're talking about a "levy" in this article. Creditors can only “garnish” wages, which means getting a judgment that forces your employer to pay a proportion of your paychecks to that creditor until the debt is paid in full.

But most people say "garnish" for actions that affect bank accounts and wages. And we will, too. Still, now you know what's meant if you hear someone talk about a levy on your account. 

When Can a Bank Take Your Money Without a Court Order?

Yes, you read that right. In some instances, banks or credit unions can suck the money right out of your account without a court order and without warning. This is called the “right of offset” and it allows your friendly bank to pull money out of your savings, checking account, or certificate of deposit (CD) if you also have a loan with them and miss a payment. 

Financial institutions normally disclose the right of offset in the agreement you sign when you open a checking account, savings account, or CD. In some cases, the lender might even be able to take money from a joint account that you have with someone else. A financial institution might even apply the right of offset to government payments deposited into your account, such as Social Security benefits.

The right of offset doesn't apply to tax-deferred retirement accounts like IRAs.

How Much Time Do I Have Before Creditors Garnish My Bank Account?

So, we've got to one of the biggest questions for debtors: "How long does it take to garnish a bank account?" 

It's easy to answer one element of that question, which is the last step in a chain of events. A bank typically takes between seven and 14 days to implement a court judgment once it receives it.

But, if you want to know how long it is from when you first skip a payment to your bank account being garnished, there's no easy answer. And that's because:

1. Different creditors escalate collection actions at different rates – One might spend a couple of months chasing you before bringing in a collection agency. Another might hand over your account straight away.

2. You may delay garnishment by negotiating a repayment plan – That could pause the whole process for as many months as you stick to the program. Even if you don’t begin repayment, it takes time for the creditor to prove that you are not paying, so you might gain a few extra days or weeks.

3. There's no legally-established period before a creditor or agency can begin legal proceedings.

4. The waiting time for a court hearing is often long but varies from state to state and county to county.

5. If you defend your case yourself or appoint an attorney, that could delay your hearing date.

How long does it take to garnish a bank account in real life? Sometimes, you could face garnishment in a matter of months. But it may well drag on for a year or years. 

How Can You Unfreeze a Bank Account?

A bank typically freezes your bank account(s) when it receives garnishment paperwork from the court. Once you receive a Notice of Garnishment, your money will be unavailable to you or your creditor until the court hearing, at which a judge decides what happens next. 

This puts you in an impossible situation, assuming you don't have a stack of Benjamins squirreled away. And that's probably the creditor's intention. 

If you can beg or borrow the money you need to repay the debt, do so now to stop the proceeding. It may be worth approaching your creditor at this point, even if you can’t come up with the entire outstanding balance. Will it accept a smaller sum than the one demanded if you find the money now? It's worth asking the question. But get the agreement in writing so the creditor can't pocket your payment and then continue with the case for the balance.

How to Unfreeze a Bank Account

There's an old joke about a tourist in a remote area asking a grizzled local farmer for directions. "Ooh, you don't want to start from here," the wise old farmer replies.

And the same answer applies when you ask how to unfreeze a bank account. Yes, you may be able to do it. But the process will probably be expensive and time-consuming. It’s best to avoid putting yourself in that position.

The Consumer Financial Protection Bureau (CFPB) provides this advice:

"A judgment is a court order. Only the court can change it. It's very difficult to get a judgment changed or set aside once the case is over. You have a much better chance to fight a collection in court if you defend the case than if you wait until a judgment is entered against you. You may also be able to work out a compromise or settlement bynegotiating with the debt collector before a court makes a judgment."

Avoid the Ostrich Strategy

Many of us adopt an ostrich strategy when we find ourselves in financial trouble: We bury our heads in the sand. Although that's understandable, it rarely works out well. 

Even if things look hopeless, keep opening envelopes from creditors and collection agencies. And take up their invitations to engage in dialog. The people you talk to may not like what you have to say. But, unless they suspect you're holding out on them, they should try to be constructive. 

And, just by engaging, you might delay a lot of nastiness, including court action, giving yourself the breathing space you need to get back on your feet. If necessary, talk to a reputable debt counselor or debt settlement specialist.

If you're served with court papers, find an attorney to act for you as soon as possible. Otherwise, you could see your bank account and wages garnished. There's more on searching for a lawyer below.

When Your Bank Account Is Frozen

Still, like that tourist in the boonies, you are where you are. And you could try to find an attorney in your state who is willing to take on your case. 

But make sure the attorneys you enlist have experience with consumer law, debt collection defense, or theFair Debt Collection Practices Act (FDCPA). Some may work with you pro bono (free) or lower their fees if you're in big financial trouble.

If you have a low income, you may be entitled to legal aid. Use this website to find a legal aid attorney in your state. And, if you're a service member, consult your local JAG legal assistance office.

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When Can a Bank Take Your Money?

When a creditor has a judgment allowing it to garnish (or "levy") your bank account, it can take your money up to the amount owed, plus any fees and costs the court has allowed. However, all states have laws that let you access some of the funds in your account(s). And Delaware bans the bank account garnishing completely.

Unfortunately, in most states, these protections aren't automatic. If you defend your case, with or without an attorney, you must ask the judge to order your bank to allow you to keep a certain sum so that you can continue to buy food and cover some basic living costs. In court, you'll have to provide evidence (bank and other financial statements and pay stubs, presumably) that shows which money in your account came from your employer. If you fail to defend the case at that point, you'll have to apply to a court later for such an order. 

Only seven states provide these protections automatically: CA, CT, DE, NV, MA, NY, and WA. You won't have to go to court there, and your bank should know how much to retain for your personal use. 

How much of your money will be shielded, whether your protections are automatic or based on a court order, will again depend on your state's law. Fourteen states protect less than $300 of your bank balance, which won't cover all your expenses. And seven states shelter between $3,000 and $10,000. Most states protect less than $1,999. The judge will have to apply those amounts according to state law.

For more detailed information, download No Fresh Start 2021, a National Consumer Law Center (NCLC) PDF publication. That was our primary source for this section. And it provides much more detail than we can here. Scroll down to page 24 for the knowledge you need. 

Bank Account Funds That Can't Be Garnished

Federal benefits, including social security, supplemental security income, and income from the Department of Veterans Affairs (plus others) that are directly credited to your bank account, have some protections from garnishment under federal law. 

However, transferring that money into a different bank account risks losing the protection, according to NOLO. So keep the money in the account to which it is directly credited. And be sure to claim this exemption in court, or you risk losing it. 

If your bank freezes your account, tell it that it must release any funds to which these rules apply. And you or your attorney should file a document with the court identifying the exemptions you are claiming.

Which Creditors Don't Need a Court Order to Garnish a Bank Account?

Except for specific government departments, all creditors need a court order to garnish your bank account. Most commonly, those departments are the Internal Revenue Service, collecting unpaid taxes, and the Department of Education collecting arrears on student loans. 

But NOLO notes that both federal and state authorities can freeze your accounts for unpaid obligations, such as child support.

How to Protect Your Bank Account From Garnishment

If you think creditors might garnish your bank account in the future, you can take steps to protect your money. Your options, gleaned from AlperLaw and the NCLC, include:

Open a bank account in Delaware – the state bans all bank garnishments.

1. Have a separate account for exempt funds so they can't be touched.

2. Having your federal benefits deposited directly onto a Direct Express prepaid card – again, that ringfences your exempt funds.

3. Opening an "exempt entireties" joint account with your spouse in a state such as Florida – In some states, these accounts are off-limits for garnishment.

4. Move money from a joint account into one solely in the name of the party who's not at risk.

5. Have your salary paid directly onto a prepaid card – Although the account can theoretically still be garnished, these rarely are for practical reasons. Just pick a card with low fees and check the fine print.

6. Get paid by check – And then cash those checks through a relative or friend to avoid the sky-high fees often charged by check-cashing outlets.

But the best way to avoid a frozen bank account and garnishment is to engage with creditors a long time before you approach such a crisis. 

You may be pleasantly surprised by how accommodating they can be. And, if creditors won't play ball, call in the cavalry in the form of a reputable debt counselor or debt settlement company.

But, if it's too late for that advice, get an attorney. And quick.