Can a Creditor Garnish Your Wages or Bank Account?

Yes, a creditor holding a judgment can reach both, but federal law treats the two places very differently. Money still sitting with your employer is limited by a specific federal formula. The same money, one day later in a checking account, is not. Whether a creditor can garnish your wages or bank account is really two questions with two answers. The dividing line is the deposit itself.

Where the money sits decides whether they can garnish your wages or bank account

Federal garnishment law is narrower than most people assume. One statute caps what may be taken from a paycheck. No federal statute caps what may be taken from an ordinary bank balance. That is the whole structure. Nothing in the federal wage statute follows the money past the paycheck. Whether they can garnish your wages or bank account therefore turns on timing, not only on the judgment. Everything below follows from that, including the odd result at the end.

At the employer: the 25 percent cap and its exceptions

The cap lives in 15 U.S.C. § 1673(a), and it is a “whichever is less” rule. For any workweek, garnishment may not exceed “25 per centum of his disposable earnings for that week.” The alternative measures how far weekly disposable earnings “exceed thirty times the Federal minimum hourly wage.” Two numbers, and the smaller one governs. In a low-wage week the thirty-times figure can leave nothing garnishable at all.

Section 1673(b) then names categories where the 25 percent ceiling does not hold. Support orders reach 50 percent of disposable earnings where the individual supports another spouse or dependent child. Where not, the figure is 60 percent. Each rises by five points, to 55 and 65 percent, for arrears more than twelve weeks past due. The standard cap also does not apply to a Chapter 13 bankruptcy court order. Debts for state or federal taxes fall outside it too. So the familiar “25 percent” shorthand describes ordinary judgment debt and little else.

Being fired over a garnishment

A federal job protection sits here — and it is exactly one debt wide. Section 1674 bars a single act. An employer may not discharge an employee over a garnishment “for any one indebtedness.” The statutory phrase is “by reason of the fact that his earnings have been subjected to garnishment.” Read that closing phrase again. A second garnishment, for a separate debt, is not covered by that sentence. Violation carries a fine of up to $1,000, imprisonment for up to one year, or both. So the protection is criminal in form and single-debt in scope.

Can they garnish your wages or bank account after the money is deposited

Deposit changes the analysis completely. Section 1673’s cap applies to disposable earnings, meaning wages as paid by an employer. It does not cap garnishment of money already sitting in a bank account. For ordinary, non-benefit wages there is no federal percentage limit once they reach the bank. What protects deposited funds instead is state exemption law, plus one narrow federal rule for benefit payments. State exemption law is where the real variation lives, and it is not uniform. A paycheck at least 75 percent untouchable on payday can land in an account with no federal cap.

The narrow federal rule for benefit deposits

Certain federal benefits carry protection into the account with them. Under 42 U.S.C. § 407(a), the right to any future payment “shall not be transferable or assignable, at law or in equity.” Those moneys are also not “subject to execution, levy, attachment, garnishment, or other legal process.” Since 2011, 31 C.F.R. Part 212 has made that operational at the bank. Within two business days of receiving a garnishment order, § 212.5 requires an account review. The lookback period is the two-month span ending on the review date.

Find benefit deposits in that window and § 212.6 takes over. The institution must ensure the account holder has full, unfrozen access to the protected amount. Notice to the account holder follows within three business days. Two business days to review, three to notify: those are the operative clocks. Amounts above the protected amount may be frozen. Section 212.3 defines that amount by comparison. Take the benefit payments posted during the lookback period. Compare that sum to the account balance at review. The lesser of the two figures is the protected amount. Covered payments include Social Security, Supplemental Security Income and Department of Veterans Affairs benefits. Railroad Retirement Board benefits are covered, as are Civil Service Retirement System and Federal Employees Retirement System payments. The rule has edges worth knowing. It does not protect against IRS tax levies. Orders issued by the United States fall outside it. So do orders from a state child support enforcement agency.

The bottom line

Federal garnishment protection is strongest at the moment of payment and thinnest a day later. Section 1673 supplies a real percentage cap. A job protection exactly one indebtedness wide comes from § 1674. Neither follows the money into an account. What replaces them is state exemption law. For a listed set of federal benefits, 31 C.F.R. Part 212 adds its account-review machinery. So the question is never simply whether a creditor can garnish your wages or bank account. It is an uneven system, and the unevenness stays invisible until a freeze arrives. The same dollar can be well protected on Friday and exposed on Monday.

This article is general information about federal garnishment limits and is not legal advice. State exemption law governs much of what happens to money in a bank account and varies considerably. For guidance on your own situation, consult a licensed attorney in your state.