Garnishment ExemptionCredit Repair Definition
Legal protection preventing certain types or amounts of income or assets from being seized through garnishment.
Definition
A garnishment exemption is a legal rule, established by federal or state law, that protects certain types or amounts of a debtor's income or assets from being seized by creditors through the process of garnishment (where a court orders a third party, like an employer or bank, to turn over funds belonging to the debtor). These exemptions ensure that debtors retain enough money for basic living necessities. Federal law limits the amount of wages that can be garnished and protects certain federal benefits (like Social Security). State laws often provide additional exemptions, which can vary widely, covering things like a portion of wages, unemployment benefits, disability payments, retirement funds, child support, and sometimes specific amounts of money in bank accounts (often tied to exempt income sources).
Frequently Asked Questions
What is the federal limit on wage garnishment?
Under the federal Consumer Credit Protection Act (CCPA), the maximum amount of disposable earnings (income after legally required deductions) that can be garnished in any week is the lesser of: (1) 25% of disposable earnings, or (2) the amount by which disposable earnings exceed 30 times the federal minimum wage. States may offer greater protection (i.e., allow less to be garnished).
Are bank accounts protected from garnishment?
Yes, to some extent. Federal rules require banks to automatically protect two months' worth of directly deposited federal benefits (like Social Security, SSI, VA benefits) from garnishment by private creditors. State laws may provide additional protections for funds in bank accounts, especially if they can be traced to exempt income sources.
How do I claim a garnishment exemption?
The process varies by state. Often, when a garnishment order is served, the debtor receives notice and a form to claim exemptions. The debtor must typically file this form with the court or notify the garnishee (e.g., employer or bank) within a specific timeframe, identifying the exempt income or assets. Failure to claim exemptions promptly may result in funds being seized.
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