For most consumer debts (credit cards, medical bills, personal loans), a creditor cannot garnish wages or freeze your bank account until they've sued you, won, and obtained a judgment. Once they have one, things move quickly.
Wage garnishment
Federal law (the Consumer Credit Protection Act) caps wage garnishment for most consumer debts at the lesser of:
- 25% of your disposable earnings (after taxes and required deductions), or
- The amount by which disposable earnings exceed 30× the federal minimum wage per week ($217.50)
Many states protect more. North Carolina, Pennsylvania, South Carolina, and Texas generally prohibit wage garnishment for most consumer debts entirely. Other states (like California) cap it lower than the federal limit. Look up your state's rule.
Higher limits for special debts
- Child support — up to 50–65% of disposable earnings
- Federal student loans — up to 15% (without a court judgment)
- Federal taxes — IRS uses its own table; no court judgment required
Bank levies
A bank levy is more abrupt than garnishment. The creditor serves a writ on your bank, the bank immediately freezes funds up to the judgment amount, and you're notified after the fact. The freeze typically lasts long enough for you to file a claim of exemption; if you don't, the funds are turned over.
What's exempt
Federal law and most states protect:
- Social Security and SSI — automatic two-month look-back protection on direct-deposited funds
- VA benefits
- Federal civil service and railroad retirement
- Unemployment and workers' comp (state-dependent)
- Most retirement accounts — 401(k), IRA, pensions (state-dependent dollar caps)
- Certain wages already garnishment-protected, once deposited
Practical tip: keep exempt income (Social Security, disability, VA) in a separate account from non-exempt funds. Commingling can complicate proving the exemption when a freeze happens.
How to stop or reduce a garnishment
- Vacate the underlying judgment if it was a default judgment and you have grounds (improper service, statute of limitations, identity issues). Hardest path, but it ends the garnishment entirely.
- Claim exemptions — file with the court for any exempt income or hardship reduction. Most states allow a reduction for proven financial hardship.
- Negotiate a settlement with the judgment creditor. Many will accept a lump sum at a discount, or convert garnishment into a manageable payment plan, in exchange for releasing the order.
- Bankruptcy imposes an automatic stay that stops most garnishments the day you file. For some people facing aggressive enforcement, this is the only realistic option.
Where a settlement program fits
The best time to settle is before a judgment. Once the creditor has won in court, they have less reason to discount — though many still will, particularly to avoid the cost of repeated enforcement. If you're already being garnished, mention it on your evaluation call; the strategy and timeline look different.