Having a paycheck garnished in Texas for a debt like a credit card or medical bill requires a very unique set of circumstances and is quite rare. Your wages can, however, be garnished for unpaid student loans, unpaid taxes or domestic support obligations. The easiest and most direct way to end a wage garnishment is to enter into a payment agreement with the creditor, where you agree to make payments and they agree to stop the garnishment. That option, however, may not be available if you are unable to pay the monthly payment that the creditor is requesting.
A bank levy, or garnishment of your bank account, typically comes as an unpleasant surprise. In Texas, when a creditor has a judgment against you (even for credit cards or medical bills), the creditor has a right to garnish your bank account. To garnish a bank account, the court files a writ of garnishment or notice of garnishment. The creditor also serves this document on the bank. Upon receipt of this document, the bank will freeze any bank accounts associated with the debtor’s name. At some point after the freeze, the account owner will become aware of the freeze. Any money in the account, after a due diligence check by the bank, will be sent to the creditor (less a fee for the bank) up to the current full balance of the judgment debt.
There are limited defenses to wage garnishment in Texas. For example, if the garnishment is due to an unpaid student loan, possible defenses are that they have the wrong person, the school or university owes you a refund or if you never applied for a student loan (forged signature). The most common defense to a bank account garnishment is if the funds in the bank account are exempt. If the funds in the account are from social security checks (and have not been mixed with any other funds), the funds may be exempt from garnishment.
Absent being able to work out a repayment plan with the creditor or having a valid legal defense to assert, the only other way to stop a garnishment is by the filing of a bankruptcy. When a bankruptcy is filed, you are protected by the ‘automatic stay.’ Notifying the garnishor of the bankruptcy filing is crucial. While you can get funds back that were garnished after the bankruptcy was filed it can take time and be a headache. If there is a bank garnishment pending, the bank should also be notified. If the bankruptcy is filed before the funds were sent from the bank to the creditor, the funds in the account will not be garnished (though the account may still be frozen while the bank goes through its procedures).
The information contained in this blog is for general information and educational purposes and is not legal advice. Reading these posts does not create an attorney/client relationship.