by Christopher Jackson, JD

The cost of living for Americans continues to increase. Whether it is from energy, food, housing, or just their day-to-day bills, many individuals are facing mounting balances on credit cards and other debts. Creditors or debt collectors may attempt to collect any past due balances through a process called garnishment. Understanding what garnishment is, who can garnish your income, and what income is protected from garnishment under federal law is important to be able to protect yourself from unethical debt collection practices. This article, the first in a series of three, presents an introduction to the topic of garnishment.

Garnishment is a legal procedure that allows creditors to take money from your bank account, your paycheck, or other income sources to fulfill your debts with them. Garnishment is a legal procedure and cannot occur without a judge issuing a court order.  Since garnishment requires a court order for it to occur, this sometimes prevents creditors of small debts from using the garnishment process due to the costs associated with court cases.

It is important to note that an exception exists regarding the court order requirement. If you owe a bank or credit union money for a loan or credit card, and you have an account with that financial institution, then it has the ability to take the past due amount out of your account to satisfy the loan or credit card debt. The financial institution is not required to obtain a court order for this process and it is not considered a garnishment, but instead is called a “set-off.” Set-offs can also occur against any Social Security benefits or tax returns you might have. The government can impose set-offs against your benefits for unpaid student loan debts, arrearages child support payments or alimony, and unpaid tax obligations. Most importantly, the government is able to do this without a court order and can do so without prior notice to you.

If you are contacted about a garnishment against you or if a court action is filed against you for debt collection, it is important to contact an attorney. If you feel that you need assistance regarding garnishment or just have questions about the topic, please call the Legal Hotline for Michigan Seniors at Elder Law of Michigan at 1-800-347-5297. More information is also available from the Federal Trade Commission.

[This blog post is the first of a series of three concerning bank garnishments]

Christopher Jackson is an attorney at Elder Law of Michigan, and has been a member of the Elder Law team since early 2014. Christopher holds a Bachelor of Arts in Political Science and International Relations from the University of Indianapolis, and graduated with his Juris Doctor in 2013 from Michigan State University College of Law. As an attorney at Elder Law, Christopher provides legal advice to Michigan seniors on a wide-variety of areas, including estate planning, wills and trusts, Medicare/Medicaid, social security benefits, and insurance issues.