What is exempt from garnishment?

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What is exempt from garnishment?

I had a judgement made aganist me in NY in 03/09. I have live in FL since 12/07. Recently my creditor froze $1756 of my bank account for payment. First I was never served with a supeona, which they said was served in 02/09 (they win of course since I wasn’t in court). The only money going into my bank account is my pension check and recently because I could not make bills, I took out some money from my 457 plan. Is this money one of the exemptions from garnishment? This the only money that I have coming in.

Asked on October 28, 2010 under Bankruptcy Law, Florida

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Typically, the funds that you mentioned are in fact exempt from garnishment. Unfortunately, banks are not responsible for determining whether your account contains exempt or non-exempt funds. Yet, even if exempt funds have been put into a bank account that is later garnished, these funds are not necessarily lost to you.  A garnished account is “frozen.” This means, the debtor cannot withdraw any money from the account. After a statutory period of time, the money is paid to the creditor. However, if you have exempt funds in your account you can file an objection with the court having jurisdiction over the judgment (within the time allowed by law - usually 60-90 days). You must complete and file special forms with the court. Once the courts have obtained proof that your funds are exempt from a collection action, they will be released to you. The specific requirements for the release of money from a frozen account differ from jurisdiction-to-jurisdiction, so contact the clerk of the court that the judgement was granted in.  

Note: If your checking account is frozen any non-exempt funds will still be turned over to your creditor to pay the judgment.

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

You have to distinguish between money that is still in a pension fund or some other retirement plan and money that is in the bank--even if it originally came from the pension or retirement account. A general matter, most retirement funds or earnings are exempt from being directly garnished. That means, a creditor cannot have the fund administrator send him part of the money from each payment or distribution to you, the way, for example, that a creditor could have your employer (with the proper order) send part of your paycheck to the creditor (called "wage garnishment"). However, once money is in the bank, regardless of the source is something that a creditor could target and potentially access.


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