Bank Account Garnishment and Levies

Can your bank account be garnished without notice? In many cases, yes, at least at first. A creditor with a judgment can have a writ of garnishment served on your bank, and the bank typically freezes the account before you hear about it. Notice comes afterward, along with your chance to claim that some or all of the money is exempt.

This article explains how bank garnishment and levies work, what money is protected, and what you can do after a freeze. For ways to protect an account before a claim arises, see our guide on protecting a bank account from creditors.

What is a writ of garnishment?

A writ of garnishment is a court order directed to a third party that holds money belonging to a debtor. For a bank account, that third party is the bank, called the garnishee. The writ tells the bank to hold the debtor's funds and report to the court what it holds (Cornell Wex).

In Florida, most bank garnishments follow a final judgment. A creditor who has won a lawsuit, and has not been paid, can ask the clerk to issue a writ. Garnishment is one of several collection tools; our article on what happens if a defendant does not pay a judgment covers the others.

Once served, the writ typically reaches whatever is in the account that day, up to the amount the writ seeks. The court later decides whether the frozen money goes to the creditor.

Can your account be frozen without notice?

Yes. Florida law does not require advance warning before a writ reaches your bank. The order of events typically runs like this:

1. The writ is served on the bank. The bank freezes funds in the account, up to the amount the writ seeks.
2. Notice is mailed to you. Under Fla. Stat. § 77.041, the creditor must mail you the writ, the motion and a notice to the defendant within 5 business days after the writ is issued or 3 business days after it is served on the bank, whichever is later.
3. Your window to respond opens. The notice includes a claim of exemption form, which must be filed within 20 days after you receive the notice.

In practice, many people learn about a garnishment when a card is declined or a payment bounces. The lawsuit that produced the judgment came first, but the freeze itself arrives without warning.

Garnishment compared with a bank levy

The terms are often used interchangeably, but they describe different processes. A garnishment runs through a court case. A levy is a seizure by the government itself, most often the IRS, which does not need a court judgment to levy a bank account.

Can a bank levy take all your money? It can reach everything in the account up to the amount owed, less protected funds such as directly deposited federal benefits. A levy generally applies to the balance on the day it is served, not to deposits made afterward. Bank fees may also come out of what is left.

What money is protected?

A garnishment or levy cannot reach every dollar. Three protections come up most often in Florida.

Directly deposited federal benefits. Social Security, SSI, VA benefits, federal civil service and railroad retirement benefits, paid by direct deposit, get automatic protection. When a bank receives a garnishment order, it must review the account and look back two months (31 C.F.R. § 212.3). The protected amount is the lesser of the benefits deposited during those two months or the account balance. The bank must leave that amount available to you and may not charge a garnishment fee against it (31 C.F.R. § 212.6). Older benefit deposits, or benefits received by paper check, are not covered by this automatic rule, though they may still be exempt if you file a claim.

Head-of-family wages. Under Fla. Stat. § 222.11, a head of family is someone who provides more than half the support for a child or other dependent. If that person's disposable earnings are $750 a week or less, all of them are exempt. Above $750 a week, the earnings are exempt unless the person agreed otherwise in writing. Once deposited, those wages stay exempt for 6 months if they can be traced and identified as earnings. Unlike federal benefits, this protection is not automatic: you typically need to file a claim of exemption.

Accounts held by spouses as tenants by the entireties. In Florida, a married couple's account titled as tenancy by the entireties is generally protected from a creditor of only one spouse. If both spouses owe the debt, or the creditor is the IRS, the account may be reachable.

Retirement accounts such as IRAs and 401(k)s are generally exempt under Florida law as well. Our page on retirement asset protection covers IRA garnishment in more detail.

Joint accounts

A joint account that is not held by spouses as tenants by the entireties can be frozen for the debt of just one owner. The bank typically freezes the account and lists the other owners in its answer to the writ.

The creditor must then notify those co-owners, who can ask the court to release their share. A co-owner who did not owe the debt may need to show which deposits came from their own money. Pay stubs, transfer records and statements typically carry the most weight.

Adding someone to your account, or being added to theirs, can therefore expose the funds to that person's creditors. That is worth weighing before opening a joint account with anyone other than a spouse.

After a freeze: claiming an exemption

If your account is frozen and some of the money is exempt, the claim of exemption is the main tool for getting it back. Under Fla. Stat. § 77.041, the process typically runs as follows:

1. File the claim within 20 days after you receive the notice. The form must be notarized and filed with the clerk, with copies to the creditor and the bank.
2. Attach proof. Benefit statements, pay stubs, proof of dependents, or account titling documents show where the money came from.
3. Watch the creditor's deadline. The creditor must file a sworn denial within 8 business days if the claim was hand delivered, or 14 business days if it was mailed. If it does not, the clerk must dissolve the writ.
4. Attend the hearing. If the creditor contests the claim, the court holds a hearing as soon as practicable and decides what is exempt.

Missing the 20-day window can make it much harder to recover exempt funds, so act quickly once notice arrives.

Protecting accounts before a claim

The options narrow sharply once a lawsuit is filed. A transfer made after a claim arises can be challenged as a voidable transfer (often called a fraudulent transfer), and a court may order it voided.

Planning done earlier, while no claim is pending or expected, can include keeping exempt funds in separate accounts, titling married couples' accounts as tenants by the entireties, and using structures that hold assets outside the reach of a U.S. court. Our guide on how to protect a bank account from creditors walks through these steps, and our offshore trust page covers one option for that planning, which is reported to the IRS every year.

Sources

• 31 C.F.R. § 212.3, definitions, including the lookback period
• 31 C.F.R. § 212.6, rules for the protected amount
• 26 U.S.C. § 6332, surrender of property subject to levy
• Fla. Stat. § 77.041, notice to individual defendant and claim of exemption
• Fla. Stat. § 222.11, exemption of wages from garnishment
• Cornell Wex, garnishment

This article is general information, not legal advice. Garnishment rules vary by state and by the facts of each case.