Debt Garnishment – How To Protect Your Funds From Creditors

If you’re in debt to the point that creditors are calling and threatening to garnish your wages or other funds, you should know what your options are to keep creditors at bay until you can straighten out your financial situation.

Perhaps one of your creditors obtained a judgment from you many years ago and you’ve since forgotten about it. You may think the creditor simply wrote it off as a bad debt.

Then you get a letter of Complaint to Enforce Judgment and an application to apply for garnishment of your bank accounts and wages. You do have some options if this happens to you.

You can challenge the judgment for its validity or claim exemption or hardship. If you believe a judgment was wrongfully executed and taken against you, you can challenge it in a court of law.

Usually, the judgement is obtained lawfully and you do owe the debt. If that’s the case, some states will let you place a motion to halt or limit the seizure of wages or funds based on hardship.

Some states let you file an exemption because you qualify as head of household. Make sure you research your states exemption laws to see about other exemptions such as Social Security, Worker’s Compensation, Unemployment Insurance, retirement and pension benefits, VA benefits and SSI benefits to see if you may qualify.

Bankruptcy is another way to protect your assets from garnishment. If you’re deep in debt and qualify for bankruptcy, all legal action that could be taken against you are immediately frozen the moment you file.

The good thing about bankruptcy is that your wages can’t be garnished and your home or car can’t be repossessed. Chapters 7, 11 or 13 are all types of bankruptcy that will block garnishment.

The debt involved is either erased from your debts owed or a trustee will help you with a payment plan later when you have reorganized your assets and are able to pay it back. You should also look carefully at the bank accounts you currently have open and plan how to handle it so your creditor doesn’t have the account number or even the name of the bank unless the court orders you to do so.

You may be tempted to withdraw the cash from all your bank accounts immediately, but consider first using such cash cards as PayPal to draw your money from. Put a hold on all direct deposits that might be sent, since those can be immediately garnished.

Make sure you stay within the law when attempting to protect your funds from garnishment. If you have to submit to an Order of Examination from the court, you’ll likely have to release the name of your employer and give an accounting of your assets.

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