Its an all-too-common scenario: A consumer goes to pull money out of the ATM, buy groceries or pay for dinner and lo-and-behold! His card is no longer authorized.
Did the bank make a mistake? Has he been robbed via identity theft? No, he's just another victim of the mandatory checking account freeze prior to bank account garnishment by a collection agency.
Funds Exempt From Bank Garnishment
When your bank receives notice from a collection agency that it has a writ of garnishment in hand and intends to garnish your bank accounts, it will freeze your accounts and notify you of the garnishment after the freeze is securely in place. This prevents you from immediately moving your money to a safer place (which everyone with any sense would promptly do, given half a chance).
Then again...your bank doesn't have the right to freeze everything. Your bank must release the following forms of income immediately:
- Child support
- Military annuities
- Social Security
- Retirement benefits
- Survivor's benefits
- Unemployment pay
- Public assistance
- Workers' Compensation
Bank Account Garnishment Exemption Claims
Don't think that your bank will be kind enough to look into your deposit records and determine for itself how much of your money is exempt from garnishment. No, its up to you to inform your bank of your exemptions, prove your case, and push the issue until your bank releases the funds. The U.S. Department of the Treasury clearly states that a bank cannot turn exempt funds over to a collection agency if the consumer has filed an exemption.
Will your bank be kind enough to immediately mail you an exemption form? Maybe, but probably not. If you know you have funds that are exempt from garnishment within your bank account, be prepared to visit the bank in person, armed with copies of your checks and your deposit records to ensure that you can claim your exemptions and protect your bank account from seizure.