Checklist · Consumer Protection

Responding to a Garnishment or a Bank Levy: A Practical Checklist

15 U.S.C. § 1671

Type
Checklist
Jurisdiction
National
Date
2025-01-20
Topic
Consumer Protection

This checklist responds to a wage garnishment or a bank levy, day by day, and separately guides employers and creditors. It opens with the day-one steps that matter most — pulling ninety days of statements, checking whether the federal automatic protection rule should have released part of the money without any claim, and calendaring an exemption deadline that is short and runs from a notice that may never have arrived. It covers the wage cap and its correct calculation, the state protections that go further including the head of household exemption, the categories of income exempt at their source and the commingling that defeats them, and the tracing methods that recover them. It works through the administrative systems that take money before any court is involved, the judgment itself and the grounds for vacating it, employer obligations and liabilities, and the preventive account structure that eliminates most of these disputes.

Responding to a Garnishment or a Bank Levy: A Practical Checklist

Consumer Protection > Wage Garnishment, Bank Levies, and Exempt Funds | Published 20 January 2025 - Updated 18 November 2025 | UpLaw - uplaw.us

Part 0 — Day one

☐ ⚠️ Pull ninety days of account statements ☐ Identify every deposit by source ☐ Separate exempt from non-exempt ☐ This is the entire case, and it is bookkeeping rather than law. ☐ ⚠️ Check the automatic protection — were federal benefits directly deposited in the two months before the order? — 31 C.F.R. Part 212 ☐ ☐ If so, the bank was required to protect that amount without any claim ☐ Confirm it did ☐ ☐ ⚠️ If it did not, telling the right person at the bank frequently frees the money the same day. ☐ Calendar the exemption claim deadline ☐ Date ______ ☐ Judgment identified: court ☐ case number ☐ date ☐ original creditor ☐ current holder ☐ ☐ Emergency triage: rent ☐ utilities ☐ medication ☐ automatic payments that will bounce ☐ ☐ Written notice to landlord, utility, lender ☐ Overdraft fee reversal requested ☐

Part 1 — The automatic protection rule

☐ Applies where a garnishment order reaches an account with directly deposited federal benefits ☐ ☐ Two-month look-back from the day the bank receives the order ☐ ☐ Protected amount = lesser of benefits deposited in the look-back, or the balance on the review date ☐ ☐ Made available immediately, without claim, court order, or creditor consent ☐ ☐ Notice describing what was protected and what was frozen ☐ ☐ Garnishment fee not chargeable against protected funds ☐ ☐ Covered: Social Security ☐ Supplemental Security Income ☐ veterans benefits ☐ federal civil service retirement ☐ railroad retirement ☐ ☐ Not covered: paper checks deposited by the recipient ☐ state benefits ☐ private pensions ☐ wages ☐ ☐ Not applicable to: child support ☐ alimony ☐ federal debt collection ☐ ☐ ⚠️ Funds above the protected amount stay frozen ☐ A lump-sum retroactive award exceeds two months and requires an immediate claim.

Part 2 — The exemption claim

☐ Court's form obtained ☐ Statements attached ☐ Exemption identified by statute ☐ ☐ One-page ledger prepared showing each deposit's source and each withdrawal's date ☐ ☐ Head of household claimed where applicable, with proof of dependents and support ☐ ☐ Expedited hearing requested where the client cannot pay rent ☐ Asking is free. ☐ Letter to creditor's counsel with statements attached ☐ Voluntary release is obtained more often than expected, because pursuing exempt funds is unprofitable. ☐ Bank asked to release on the creditor's written consent ☐ ☐ If the deadline was missed: relief motion ☐ new claim on the next levy ☐ attack the judgment ☐

Part 3 — Wages

☐ Framework — 15 U.S.C. § 1671 ☐ Restriction — 15 U.S.C. § 1673 ☐ Anti-discharge — 15 U.S.C. § 1674 ☐ State exemptions — 15 U.S.C. § 1675 ☐ Effect on state law — 15 U.S.C. § 1677 ☐ Rules — 29 C.F.R. Part 870 ☐ ☐ Cap verified: lesser of twenty-five percent of disposable earnings, or the amount by which disposable earnings exceed thirty times the federal minimum hourly wage ☐ ☐ Disposable earnings = gross minus deductions required by law ☐ Not minus voluntary retirement, insurance, or dues ☐ ☐ ⚠️ Employer's calculation checked ☐ Deducting voluntary items first under-garnishes; applying the percentage to gross over-garnishes. Both are common. ☐ Support orders: higher percentage, varying with other dependents and arrearage age ☐ ☐ State protections: total prohibition for consumer debts ☐ head of household ☐ lower percentage ☐ higher exempt floor ☐ ☐ ⚠️ Head of household is the most valuable state protection and is claimed far less often than it applies ☐ ☐ Anti-discharge protection: federal covers one indebtedness ☐ State extension checked ☐

Part 4 — Income exempt at the source

☐ Social Security and Supplemental Security Income — 42 U.S.C. § 407 ☐ Follows funds into an account — Philpott v. Essex County Welfare Board ☐ Bennett v. Arkansas ☐ Washington State Department of Social and Health Services v. Guardianship Estate of Keffeler ☐ ☐ Veterans benefits — 38 U.S.C. § 5301 ☐ ☐ Federal civil service retirement — 5 U.S.C. § 8346 ☐ Procedures — 5 C.F.R. Part 550 ☐ ☐ Railroad retirement — 45 U.S.C. § 231m ☐ ☐ Private retirement plans — 29 U.S.C. § 1056 ☐ Patterson v. Shumate ☐ ☐ Individual retirement accounts — Rousey v. Jacoway ☐ ☐ Bankruptcy track: 11 U.S.C. § 522 ☐ 11 U.S.C. § 362 ☐ Taylor v. Freeland & Kronz ☐ Schwab v. Reilly ☐ ☐ ⚠️ Commingling defeats these protections, and tracing is the debtor's burden ☐

Part 5 — Tracing commingled funds

☐ Lowest intermediate balance — exempt funds presumed to remain; non-exempt presumed spent first ☐ Most favorable; argue for it. ☐ First in, first out — withdrawals attributed to earliest deposits ☐ Can consume exempt deposits; resist where permitted. ☐ Pro rata — withdrawals attributed proportionally ☐ ☐ Direct tracing where the levy closely followed a benefit deposit ☐ Simplest and best where available. ☐ Evidence assembled: ninety days of statements ☐ benefit award letters ☐ a one-page ledger ☐ ☐ ⚠️ A one-page ledger with statements attached persuades where legal argument alone does not, because the court's question is factual. ☐ Where tracing is genuinely complex and amounts are modest, redirect effort to head of household or to attacking the judgment ☐

Part 6 — State exemption landscape

☐ State exemption statute read in full ☐ Amounts ☐ claiming procedure ☐ whether any exemption is automatic ☐ ☐ Automatic account exemption — a floor the bank must leave available without a claim ☐ Where it exists, the most useful protection in the state. ☐ Homestead ☐ Vehicle ☐ Tools of the trade ☐ Household goods ☐ Wildcard ☐ ☐ Insurance and annuity proceeds ☐ Workers' compensation ☐ Unemployment ☐ Public assistance ☐ Crime victim compensation ☐ ☐ Whether each survives deposit ☐ ☐ Joint accounts: whole balance ☐ presumed half ☐ debtor's contribution only ☐ ☐ Spousal and community property rules ☐ When the debt arose ☐

Part 7 — Collection without a court

☐ Administrative offset — 31 U.S.C. § 3716 ☐ 31 C.F.R. Part 285 ☐ ☐ Administrative wage garnishment — 31 U.S.C. § 3720D ☐ Hearing request deadline ☐ ☐ Student loans — 20 U.S.C. § 1095a ☐ 34 C.F.R. Part 682 ☐ Rehabilitation and consolidation stop it ☐ Timely hearing request suspends it ☐ ☐ Child support — 42 U.S.C. § 666 ☐ 42 U.S.C. § 659 ☐ Highest priority against a paycheck. ☐ Tax levy — 26 U.S.C. § 6331 ☐ Exempt property — 26 U.S.C. § 6334 ☐ 26 C.F.R. Part 301 ☐ ☐ ⚠️ Return the exemption statement ☐ A levied taxpayer who does not is exempted at the lowest amount. ☐ Priority among competing garnishments determined ☐ Aggregate cap still applied ☐

Part 8 — Collection conduct and bank conduct

☐ 15 U.S.C. § 1692 ☐ 15 U.S.C. § 1692e ☐ 15 U.S.C. § 1692f ☐ ☐ Violations screened: threatening garnishment without a judgment or on exempt funds ☐ misstating the amount subject to garnishment ☐ improper employer contact ☐ continuing after notice of exemption ☐ ☐ Bank conduct: froze more than the order required ☐ failed to perform the look-back ☐ charged fees against protected funds ☐ refused release after an exemption was allowed ☐ ☐ Deposit agreement and state law claims ☐ 12 C.F.R. Part 1006 ☐

Part 9 — Attacking the judgment

☐ Was service proper? ☐ Motion to vacate where it failed ☐ This resolves the garnishment entirely rather than exempting funds from it. ☐ Statute of limitations ☐ Accrual ☐ Any revival by payment or acknowledgment ☐ ☐ Standing: assignment chain documented? ☐ Debt buyers frequently cannot prove it. ☐ Amount: interest rate ☐ fees ☐ payments credited ☐ ☐ Dormancy and renewal status ☐ ☐ Prior satisfaction, settlement, or discharge never noted ☐ ☐ ⚠️ Two underused intervention points: appearing in the original lawsuit, and vacating the default ☐

Part 10 — Prejudgment attachment

☐ Sniadach v. Family Finance Corp. of Bay View ☐ Fuentes v. Shevin ☐ Mitchell v. W. T. Grant Co. ☐ North Georgia Finishing, Inc. v. Di-Chem, Inc. ☐ Connecticut v. Doehr ☐ ☐ Requirements: particularized showing to a judicial officer ☐ bond ☐ prompt post-deprivation hearing ☐ ☐ ⚠️ Post-judgment process is different — Endicott Johnson Corp. v. Encyclopedia Press, Inc. ☐ The protection there is the exemption claim, not a hearing.

Part 11 — Employers

☐ Disposable earnings calculated correctly ☐ ☐ Correct cap applied for the order type ☐ ☐ Priority honored ☐ Aggregate cap applied ☐ ☐ No discharge for a single garnishment — 15 U.S.C. § 1674 ☐ State extension checked ☐ ☐ ⚠️ Answer the order on time ☐ Failure can make the employer liable for the entire judgment in many states. ☐ Confidentiality maintained ☐ Disclosure limited to what the process requires ☐ ☐ Withholding stopped promptly on satisfaction or release ☐ Over-withheld amounts refunded ☐ ☐ Employee notified and given a copy where required ☐ Records retained ☐

Part 12 — Special situations

☐ Frozen tax refund — earned income and child tax credit portions ☐ Trace to the credit using the return ☐ ☐ Joint account with an elderly parent ☐ ⚠️ Use a power of attorney for convenience instead of adding a holder. ☐ Small business owner — business receipts in a personal account are not exempt ☐ ☐ Payroll card — whether it is an account subject to levy depends on the structure ☐ ☐ Gig worker — wages subject to the cap, or receivables subject to full garnishment ☐ ☐ Lump-sum benefit award — exceeds the two-month protection ☐ Immediate claim required ☐ ☐ Account closed after repeated levies — pushes the client to check cashers, where fees are higher ☐

Part 13 — Prevention

☐ Exempt income in its own account, nothing else deposited into it ☐ Converts every future dispute into a one-page showing. ☐ Direct deposit ☐ The automatic protection reaches only electronic deposits. ☐ Address current with every court, creditor, and agency ☐ ☐ No adult children added to a benefits account ☐ ☐ Respond to the original lawsuit ☐ ☐ Every settlement documented with a written agreement and a filed satisfaction ☐ ☐ Ninety days of statements kept ☐ ☐ ⚠️ Client told the automatic protection exists, in words they can repeat to a bank representative ☐

Part 14 — The path from debt to frozen account

Walk this with the client. They usually do not know how an obligation from years ago produced a freeze this morning.

Stage What happened Intervention available
The obligation Medical bill, card, car deficiency, lease, utility, payday loan — often assigned to a debt buyer Dispute, validate, negotiate
The lawsuit Filed in a limited jurisdiction court; service attempted ⚠️ Appear. Appearing is free and a meaningful share of claims fail on limitations, standing, or proof of assignment
The default judgment Entered on affidavit, accruing statutory interest ⚠️ Vacate where service failed
Dormancy and renewal Enforceable five to twenty years, renewable Check status; a stale judgment may be unenforceable
Discovery in aid of execution Interrogatories, subpoenas, examination under oath Respond; contempt for nonresponse is the route to arrest — for disobeying an order, not for the debt
The writ Served on the employer or bank, not the debtor None at this stage
The freeze Immediate; learned when a card is declined Day-one checklist
Notice and claim window Short, mailed to a possibly stale address ⚠️ Calendar it the day you learn of the freeze
Turnover Funds to the creditor, applied to costs and interest first Nothing; the money is gone

☐ Stage identified ______ ☐ Intervention selected ______ ☐ ⚠️ The earliest interventions are the cheapest and the most complete ☐

Part 15 — Working with the creditor

☐ Statements, letter, call, then motion ☐ Practitioners who begin with the motion spend a hearing date on something a letter would have resolved. ☐ Letter identifies the exempt source, attaches statements, and cites the statute ☐ ☐ Point made that pursuing exempt funds is unprofitable ☐ ☐ Recognize the creditor frequently does not know what is in the account ☐ Levies issue in volume against account numbers, not people. ☐ Payment plan offered where some funds are non-exempt ☐ Creditor gets predictable recovery; debtor keeps banking access. ☐ Release filed when agreed ☐ Satisfaction of judgment obtained and confirmed filed on payoff ☐ ☐ ⚠️ The most common recurrence in this field is a judgment resolved years ago and never marked satisfied. ☐ Debt buyer distinguished from original creditor ☐ Assignment chain challenged ☐ ☐ Actionable conduct preserved — 15 U.S.C. § 1692e, 15 U.S.C. § 1692f ☐

Part 16 — When bankruptcy is the answer

☐ Stay is immediate and comprehensive — 11 U.S.C. § 362 ☐ Stops wage garnishment, levies, calls, and suits on the day of filing ☐ ☐ Exemptions may protect more — 11 U.S.C. § 522 ☐ Federal or state set, depending on the state's election ☐ ☐ Retirement protected — Patterson v. Shumate ☐ Rousey v. Jacoway ☐ ☐ Recent garnishments possibly recoverable as preferences ☐ ☐ Not discharged: support ☐ most taxes ☐ most student loans ☐ criminal fines and restitution ☐ fraud debts ☐ ☐ Schedules drafted precisely — Taylor v. Freeland & Kronz ☐ Schwab v. Reilly ☐ ☐ ⚠️ For a client whose exempt income is repeatedly frozen by a judgment that will outlive the problem, this is frequently the only durable answer ☐

Part 17 — Terminology to fix with the client

☐ Garnishment — process against a third party holding the debtor's money ☐ ☐ Levy and attachment — levy generally reaches property or an account; attachment often refers to prejudgment seizure ☐ ☐ Execution — process against property, by a sheriff or marshal ☐ ☐ Exemption versus claiming an exemption ☐ ⚠️ Clients believe that because the money is exempt, nothing further is required. Correcting that in the first conversation is the most useful thing said in these matters. ☐ Disposable earnings — gross minus legally required deductions only ☐ ☐ Offset — administrative, no court ☐ ☐ Withholding — automatic and continuing in the support context ☐ ☐ Turnover — the point after which the money is gone ☐

Part 18 — Why exemptions fail, and what to do about it

☐ Notice went to a stale address ☐ Frequently from a credit application signed years earlier. ☐ The form is legalistic — requiring identification of the exemption by statutory citation ☐ Prepare it for the client ☐ ☐ The deadline is short — ten to twenty days, running from service or mailing ☐ ☐ The hearing requires missing work ☐ Request a remote appearance or an off-hours setting where available ☐ ☐ No counsel is appointed ☐ Legal aid referral made where the practitioner cannot take it ☐ ☐ Consequences of failure understood: funds released ☐ the next deposit levied ☐ the account closed by the bank ☐ the client pushed out of banking ☐ ☐ Reforms worth advocating locally: plain-language notices ☐ a checkbox form listing common exemptions by name ☐ automatic protection of a floor amount ☐ service by more than one method ☐ a mechanism for a bank to reject a levy on an account receiving only exempt deposits ☐ ☐ ⚠️ These are procedural and cheap, several states have adopted them, and the effect is measurable ☐

Part 19 — Advising a creditor

☐ Screen before issuing a writ: is the debtor employed ☐ does the account receive direct deposits ☐ any indication of benefit income ☐ ☐ ⚠️ A writ that captures a benefits account produces a released freeze, a hearing, possible fee exposure, and no recovery. ☐ Wage garnishment preferred over account levy for an employed debtor — automatic cap, employer calculation, predictable recovery ☐ ☐ Head of household status checked before serving a wage writ ☐ ☐ Employer burden considered ☐ Failure to answer creates liability for the entire judgment in many states, and produces a hostile witness. ☐ Conduct rules observed — 15 U.S.C. § 1692e, 15 U.S.C. § 1692f ☐ ☐ Satisfaction filed promptly on payoff ☐ ☐ ⚠️ Efficient practice converges on both sides: identify what is exempt early, release it, and pursue what is not ☐

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