Garnishment and Levy Basics
Understanding wage garnishment and bank levies is critical for protecting your income and assets. This guide explains how these enforcement mechanisms work, legal limits and exemptions, and your response options.
Get the Free First 72 Hours ChecklistEducation Only: This content is for educational purposes and does not constitute legal advice. Laws vary by state. Consult with a licensed attorney for guidance specific to your situation.
What Are Garnishment and Levy?
When negotiation fails, creditors can use legal enforcement mechanisms to collect judgments. The two most common methods are wage garnishment and bank account levy.
💼 Wage Garnishment
Court order directing your employer to withhold a portion of your wages and send it directly to the creditor. Continues until judgment is paid in full.
Typical Limit:
25% of disposable income or amount above 30x federal minimum wage, whichever is less
🏦 Bank Account Levy
Court order freezing your bank account and seizing available funds up to judgment amount. One-time seizure of balance at time of levy.
Typical Process:
Account frozen immediately, funds held 10-30 days for objections, then released to creditor
Wage Garnishment: How It Works
Wage garnishment is the most common enforcement method for employed debtors. Understanding the process helps you respond effectively.
Creditor Files Garnishment Order
After obtaining judgment, creditor files garnishment paperwork with court and serves your employer. You typically receive notice before garnishment starts.
Employer Receives Order
Your employer is legally required to comply. They calculate garnishment amount based on your disposable income and begin withholding from your next paycheck.
Wages Are Withheld
Employer withholds up to 25% of disposable income (after taxes and mandatory deductions) each pay period. Continues until judgment is satisfied or order is lifted.
Funds Sent to Creditor
Employer sends withheld wages directly to creditor or court. You receive remaining wages as usual. Garnishment appears on your pay stub.
Federal Wage Garnishment Limits
Federal law limits garnishment to the lesser of:
- •25% of disposable earnings (after taxes and mandatory deductions)
- •Amount above 30x federal minimum wage per week ($217.50/week as of 2024)
Note: Some states have lower limits that provide greater protection. Check your state's laws.
Bank Account Levy: How It Works
Bank levies allow creditors to seize funds directly from your account. The process is faster than garnishment but only captures funds available at the moment of levy.
Creditor Obtains Levy Order
Creditor files levy paperwork with court and serves your bank. You may receive notice before or after the levy is executed (varies by state).
Bank Freezes Account
Bank immediately freezes your account up to judgment amount. You cannot access frozen funds during hold period (typically 10-30 days).
Objection Period
You have limited time (10-30 days depending on state) to file exemption claim if funds are protected (Social Security, disability, etc.).
Funds Released to Creditor
If no valid exemption is filed, bank releases frozen funds to creditor. Remaining balance (if any) is unfrozen and available to you.
⚠️ Critical Timing Issue
Bank levies seize only the balance available at the exact moment the levy is executed. If you have $500 in your account when the levy hits, that's all the creditor can take—even if the judgment is for $5,000. Creditors can file multiple levies, but each requires separate court orders and fees.
Protected Income and Assets (Exemptions)
Federal and state laws protect certain income sources and assets from garnishment and levy. These exemptions ensure you can meet basic living needs.
✅ Commonly Protected Income Sources
- Social Security benefits (retirement, disability, survivor benefits)
- SSI (Supplemental Security Income)
- Veterans benefits (VA disability, pension)
- Unemployment benefits
- Workers' compensation
- Public assistance (TANF, food stamps)
- Child support payments received
- Retirement accounts (401k, IRA, pension—with limitations)
⚠️ Important Exemption Rules
- •Exemptions are not automatic. You must file exemption claim when levy occurs.
- •Commingling reduces protection. If protected funds (Social Security) are mixed with regular income in same account, protection may be limited.
- •Lookback period matters. Banks must protect 2 months of federal benefit deposits, but you must prove the source.
- •State laws vary. Some states provide additional exemptions beyond federal protections.
How to Respond to Garnishment or Levy
Quick action is critical when facing garnishment or levy. Here's what to do immediately.
Option 1: File Exemption Claim
If your income or account contains protected funds, file exemption claim immediately (within 10-30 days depending on state).
When to Use:
Your income is primarily from Social Security, disability, veterans benefits, or other protected sources.
Option 2: Negotiate Payment Plan
Contact creditor immediately to propose payment plan. Many creditors will release garnishment if you agree to structured payments.
When to Use:
You have income but garnishment creates severe hardship. Creditor may prefer predictable payments over enforcement.
Option 3: File Hardship Objection
Some states allow hardship objections if garnishment prevents you from meeting basic living expenses (rent, food, utilities).
When to Use:
Garnishment leaves you unable to afford rent, food, or other necessities. Requires documentation of expenses.
Option 4: Consult Bankruptcy Attorney
Bankruptcy filing immediately stops garnishment and levy through automatic stay. May be appropriate for multiple judgments or overwhelming debt.
When to Use:
Multiple judgments, total debt exceeds ability to pay, or garnishment creates insurmountable financial crisis.
Prevention: Stop Garnishment Before It Starts
The best defense against garnishment and levy is proactive negotiation. Act before creditor files enforcement.
✅ Respond to Initial Contact
Don't ignore creditor's demand letter. Early response shows willingness to cooperate and opens negotiation window.
✅ Propose Settlement or Payment Plan
Offer realistic settlement or monthly payments. Most creditors prefer negotiated resolution over enforcement costs.
✅ Document Financial Hardship
If you can't pay, explain why with documentation (job loss, medical bills, etc.). Creditors may be more flexible.
✅ Get Agreements in Writing
Any payment arrangement must be documented in writing before you make payments. Protects both parties.
Your Next Steps
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