Winning a money judgment essentially means winning a court order that compels the other party, known as the judgment debtor, to pay a certain amount of money. The award could include your legal fees along with interest and penalties. Regardless, it is up to you to enforce payment. One tool at your disposal is garnishing the debtor’s bank account.
Bank account garnishment is known more formally in most states as non-periodic garnishment. It is called non-periodic because it is a one-off transaction. Garnishing someone’s wages would be considered periodic because it’s ongoing, according to a prescribed schedule.
As for garnishing a judgment debtor’s bank account, most states allow it. But there are generally rules and restrictions in play. It is important to know what those are before the winning party, also known as the judgment creditor, petitions the court for a writ of garnishment.
Garnishing Is Seizing Property
For all intents and purposes, garnishment is the act of seizing someone else’s financial property. When you garnish wages, you are compelling a person’s employer to seize some of his pay to settle a debt. Garnishing a bank account is no different. The money in the debtor’s account, or at least a portion of it, is seized and forwarded to the creditor.
Judgment Collectors, a Salt Lake City collection agency that specializes in judgments in nearly a dozen states, explains that judgment creditors have to get a court order to garnish someone’s bank account. That order is delivered to the debtor’s bank, whereupon the bank is compelled to seize the debtor’s assets and forward them to the creditor or its representatives.
All or a Portion
As previously mentioned, most states allow non-periodic garnishment of a person’s bank account. Either the entire bank balance can be garnished or only a certain portion, leaving the rest of the money in the account exempt.
Massachusetts is one state that limits the amount available for garnishment. State law exempts the first $2,500 from being taken from a bank account. New York also has an exemption that protects up to $3,600.
Delaware is one of the rare states that prohibits bank account garnishment completely. California, Texas, Florida, and Pennsylvania all allow such garnishment but with additional protections and property exemptions.
Garnishing A Tax Refund
Property exemptions were mentioned in the previous paragraph because judgment creditors can go after more than just wages and bank accounts. Take Michigan. Under the periodic garnishment category, judgment creditors in Michigan can go after other types of income – like rental payments. Under the non-periodic category, even a state income tax refund can be garnished.
Michigan refers to income tax garnishment as tax interception. The state Department of Treasury would intercept a judgment debtor’s tax refund and forwarded to the creditor. Again, this is a one-time thing. A single court order to garnish a tax refund would not be applicable over multiple years. An order is good for one year.
Only One Way to Collect
It should be noted that garnishment is just one way to collect on an outstanding judgment. Judgment creditors also have access to property liens, property seizure and sale, and other tools. The trick is finding the most appropriate tool for each case. Seizing and selling a piece of property tends to be a last resort option in most cases.
If you are a judgment creditor looking for ways to collect, you may have garnishment available in your state. If so, look into both periodic and non-periodic garnishments. You may be able to go after the debtor’s wages and bank accounts.