Virginia law permits judgment creditors to freeze a debtor's bank account through garnishment. This legal tactic requires that the bank freeze the money in the debtor's account and eventually send it to the creditor. A creditor must strictly comply with legal requirements, however, and may not be able to take all sources of income.
The Garnishment Process
When the court gives a creditor a judgment against a debtor, the court clerk makes an official record of it. The creditor can then ask the court to order garnishment of the debtor's bank account by filing a writ of execution or a suggestion of garnishment form, depending on the rules of the court that issued the judgment. The creditor must then serve the debtor and the debtor's bank with a summons that describes the garnishment process and gives the bank directions on how to withhold the applicable funds. The summons also includes a return date, which is when the court will hold a hearing so the debtor can object to the garnishment if any money in the account is exempt. The bank issues a temporary freeze on the account until the return date if the debtor doesn't file paperwork to make a claim that certain funds are exempt from garnishment. If the debtor doesn't do this, the garnishment can continue for 30, 60, 90 or 120 days.
Although Virginia law prohibits the garnishment of certain sources of money, no law limits the maximum amount of money a creditor can take. A creditor can only garnish 25 percent of a debtor's disposable wages or 30 times the federal minimum wage, whichever is less, but after wages are deposited into a bank account, the creditor can take the whole amount up to the amount of the judgment, plus costs and fees.
Certain funds are exempt from garnishment by federal law, according to the Federal Trade Commission. Exempt funds include:
- Social Security benefits
- Supplemental Security Income benefits
- Veterans’ benefits
- Military annuities and Survivors’ benefits
- Student assistance
- Railroad Retirement benefits
- Federal Emergency Management Agency federal disaster assistance.
Additionally, Virginia state law exempts the following benefits and income from garnishment:
- Unemployment compensation
- Workers' compensation
- Public assistance
- Industrial sick benefits insurance
- Crime victims benefits
- Certain retirement benefits
- Child support payments
Not all of these funds are exempt for all debts, however. For example, debts owed to the government or for child support orders usually have fewer exemptions allowed.
Virginia banks are required to look back two months for deposits of exempt benefits into an account, unless the garnishment order comes from the United States government or a state child support collection agency. If the bank finds that the account holds exempt money within this time frame, it must allow the debtor access to the actual amount of the exempted income or benefits directly deposited to his account during this look-back period or the account balance as of the day the bank made the review, whichever is less.
A debtor can file a claim of exemption form to avoid having his exempted income garnished. This form allows the debtor to state why a portion of his account should not be frozen and subject to garnishment. It also includes a request for a hearing in court within seven days of filing the form so the debtor can explain why his income is exempt from garnishment. If the debtor fails to take this step, he can lose his rights and be barred from asserting them later.