Judgment and Bank Account Seizures in North Carolina
Many families in America are experiencing financial difficulties due to COVID-19. Some individuals may have their wages garnished or bank accounts frozen by those to whom they owe money. This can occur when a court orders them to repay a debt. In some states, this initiative was paused during the COVID-19 pandemic, but it may resume soon. Let’s examine how individuals can safeguard their finances and what steps they can take if this occurs.
Wage Garnishment: When Someone Takes Part of Your Paycheck
When you owe money, the person you owe can sometimes deduct part of your paycheck. This is called wage garnishment. The good news is that there are rules about how much they can take.
Federal Law Protects Some of Your Wages
The government states that debt collectors can’t take the entire amount of your paycheck. They have to leave you with either:
- 75% of your pay, or
- 30 times the minimum wage ($217.50 per week)
Whichever amount is more significant, you get to keep it. The rest can be taken to pay the debt.
Some States Protect Even More of Your Wages
Many states have rules that protect a greater portion of your wages than the federal law. For example:
- In California, you get to keep at least $480 per week.
- In New York, you are required to keep at least $450 per week.
- In some states, such as North Carolina and Texas, your wages are protected.
Knowing your state’s rules is essential because they might help you save more money.
What to Do If Your Wages Are Being Garnished?
- Check if the amount taken is correct. Ensure it complies with your state’s regulations.
- Look out for multiple garnishments. If more than one debt collector attempts to collect money, ensure they don’t gather too much together.
- Ensure that enough taxes are withheld from your paycheck. If not, you might owe more taxes later.
- If you’re paying child support, taking it directly from your paycheck may be a better option. This can protect you from other debt collectors taking too much.
Bank Account Garnishment: When Someone Takes Money from Your Bank?
Debt collectors can also try to take money directly from your bank account. This can be scary because it can happen without warning. But there are ways to protect your money.
Protecting Your Bank Account:
- Know What Money is Protected
Some types of money are protected even after entering your bank account. These include:
- Social Security benefits
- Veterans benefits
- Some wages (in some states)
- Use Direct Express for Social Security and Veterans Benefits
If you get Social Security or Veterans benefits, you can put them on a Direct Express card instead of a bank account. This money is protected from debt collectors.
- Open a Separate Account for Protected Money
If you have money that debt collectors can’t take, put it in a separate bank account. This makes it easier to prove that the money is protected.
- Check Your State’s Rules
Some states protect a certain amount of money in your bank account, no matter where it came from. For example:
- In New York, $2,664 to $3,600 is protected.
- In California, $1,788 is protected.
- In Delaware, debt collectors are prohibited from taking money from bank accounts.
What to Do If Your Bank Account is Frozen?
If a debt collector freezes your bank account:
- Act quickly. You usually have a short time to claim that your money is protected.
- Check where the money came from. Inform the court whether the payment is from Social Security or wages protected in your state.
- Get help from a lawyer if you can. They can help you prove your money is protected.
Special Rules for Student Loans
If you owe money on student loans, the rules are a bit different:
- The government can deduct up to 15% of your wages without first going to court.
- They have to leave you with at least $217.50 per week.
- You can ask them not to take your wages if it would cause you financial hardship.
- If you start repaying your loans, they might stop taking your wages.
Protecting Your Money: Tips and Tricks:
Here are some ways to keep your money safe from debt collectors:
- Use a Prepaid Card
Put some of your money on a prepaid card. Debt collectors are less likely to find and take this money.
- Get Paper Checks Instead of Direct Deposit
If you’re concerned about your bank account being frozen, you can request paper checks instead of direct deposit. Just be careful not to lose them!
- Open a Bank Account in Another State
Some states make it more difficult for debt collectors to withdraw money from bank accounts. You might be able to open an account in one of these states.
- Use a Business Bank Account
Keeping money in a business account can sometimes protect it from personal debts if you own a business.
- Consider an Offshore Bank Account
This is complicated and expensive, but it can make it hard for debt collectors to reach your money.
Remember: Don’t Try to Hide Your Money
It’s important to know that trying to hide your money from debt collectors can get you in trouble. If you lie about where your money is, you could be punished by the court. Instead, focus on legal ways to protect your money.
Getting Help
Dealing with debt collectors can be scary and confusing. If you’re having trouble:
- Consult with a lawyer who is knowledgeable about debt collection laws. Many offer free consultations.
- Contact a credit counseling agency. They can help you make a plan to deal with your debts.
- Learn about your rights. The Consumer Financial Protection Bureau (CFPB) has information about debt collection laws.
Remember, you have rights even when you owe money. Debt collectors must follow specific rules regarding the collection of debts. If they break, you can report these rules to the CFPB or your state’s attorney general.
Conclusion:
Protecting your money from debt collectors isn’t always easy, but it’s possible. Know your rights, understand the rules in your state, and don’t be afraid to ask for help. With the correct information and actions, you can keep more of your hard-earned money and work towards a better financial future.
Table of Contents