Going into debt is a huge fear for a substantial portion of American citizens. Almost one-third of the US population lives close to poverty, with income less than twice the poverty threshold. Trying to make ends meet can be difficult, and it is very easy to get into financial difficulty. Many people are just one missed paycheck away from going into significant debt.
When this happens, the last thing you want is a debt collector taking money out of your bank account without authorization. In most cases, creditors must get a court order before garnishing bank accounts. However, the federal government and some federal agencies can garnish bank accounts without a court order in some situations.
Ronald Arthur Stearns Sr. PLLC
If you have unpaid debts or unpaid taxes, the best thing to do is hire an experienced tax attorney immediately. Ronald Arthur Stearns Sr. PLLC can help you avoid garnishment by advising you on your legal rights, assessing whether you are eligible for federal benefits, and helping you set up a payment plan that works within your financial means.
Ronald Arthur Stearns Sr. PLLC works on behalf of Texas taxpayers to protect their rights and ensure that fair debt collection practices are upheld. He has over 26 years of experience fighting aggressively for taxpayers’ rights and he has gained significant experience and accomplishments throughout his years of practice.
He personally handles every case that comes into his office and he offers tailor-made legal strategies for all of his clients. When your personal finance is at risk, it is important to have a tough legal representative by your side.
Call our law firm today for an initial consultation at 210-853-2135.
Bank Account Garnishment in Texas
There are a few different ways creditors can recover a debt in Texas. Often, their first method is to sell the debt to a third-party collection agency that uses more aggressive methods to collect the unpaid debt. One of these methods, and often the last resort, is to file a debt collection lawsuit against the bank of the debtor to withdraw funds from their accounts to pay back debts.
Once a debt collector sues the bank and issues a Writ of Garnishment, the garnishment process begins. The debtor’s bank account is frozen until the court judgment is finalized, which can be their personal account, shared account, or savings account. This means the individual cannot access funds in their bank account to pay bills or survive until the account is unfrozen.
When the bank account levy is finalized, creditors can legally take money from your bank accounts to pay back unpaid debts. There is no maximum amount that creditors can take from your accounts and they can continue to withdraw money until the debt is paid off. Bank account garnishment can happen for consumer debt, personal debts, unpaid child support, taxes, business debt, and other civil and federal debts.
Can a Debt Collector Take Money From My Bank Account Without Authorization in Texas?
In most situations, a debt collector cannot take money from your bank account without authorization in Texas. However, you may not receive a notification straight away that a bank levy has been placed on your account. Often, people discover they have a levied account when they go to take money from their account and it is frozen.
This is because debt collectors are afraid the debtor will move the money out of their account before it can be taken. You will usually receive notification of the garnishment after your bank account has been frozen or if you contact your financial institution to figure out why your personal or business account is frozen.
A debt collector is required to send you a debt validation letter once they notify you of the debt. You then have a limited time to address the debt by contacting the debt collector and beginning repayment. If you do not address the debt within this time, they can sue you or your bank to garnish your account.
Because of this, it is important to respond promptly to any notification from a debt collector about an unpaid debt. If you do not take legal action to secure your assets, your bank accounts could be frozen without notification and a levy could be placed on your account.
The exception to this rule is federal debt. If you owe money to the federal government, a government agency, or a federal debt collector, they can garnish bank accounts without authorization. If you owe unpaid child support, spousal support, or a federal student loan, the government may place a levy on your bank account without a court order.
With federal debt, the risks are high because debtors have fewer protections under the law. If you receive notification of unpaid federal debt, a Texas debt attorney can help you set up a payment plan and assess whether you can settle your debt for less than you owe. If you cannot pay your debt, you may be eligible for Currently Not Collectible (CNC) status or an Offer in Compromise.
Limits on a Bank Levy in Texas
Under Texas law, there are certain limitations placed on debt collectors. Although debt collectors have the upper hand when securing debt, not everything can be taken from you if you have unpaid debt in Texas. There are certain federal benefits and types of personal property that cannot be garnished from your bank account to pay back a debt.
Some things that are protected from garnishment for consumer debt under Texas and federal law include:
- Social security benefits, including social security retirement funds.
- Veteran benefits.
- Unemployment benefits.
- Worker’s compensation.
- Child support.
- Spousal support.
- Temporary Assistance for Needy Families.
- Money from selling your homestead (only for the first six months after the sale).
Your primary residence cannot be garnished for paying back a consumer or civil debt. However, if you took out another home equity loan on your primary residence to pay for consumer debt, you risk defaulting on your mortgage and losing your home. If you cannot pay back property tax or your mortgage, the banks can take your home off of you.
Laws on Wage Garnishment in Texas
Similar to bank account garnishment, wage garnishment is when your incoming wages are used to pay back a debt. Wage garnishments happen before your wages go into your bank account. Your employer receives the notification of wage garnishment and they must follow the court order by taking money from your paycheck to pay back your unpaid debts.
Fortunately, in Texas, private creditors do not have the right to garnish wages. Your wages can only be garnished for unpaid child support, taxes, federal student loans, and spousal support payments. Other creditors cannot threaten to garnish wages as they do not have the legal right to do so.
In most situations, a creditor must notify you before garnishing your wages for unpaid debts. However, the IRS and some tax collection agencies may garnish your wages without notifying you. You should know of unpaid taxes or the original debt through mail notifications and warning letters. However, if you are unaware that you owed a debt and they begin to garnish your wages, contact a tax attorney immediately.
Although there are no limits on the amount of money creditors can take from your wages, they typically base their amount on the number of dependents that you have and your tax deduction rate.
Statute of Limitations on Bank Account Garnishment Texas
There is a statute of limitations on all debts owed in Texas. Creditors have four years to sue debtors for unpaid debts. Once this period has passed, they cannot legally sue you for the money that you owe. This means that they cannot garnish your bank accounts if the debt is older than four years.
Because debt collectors must file a lawsuit against a debtor for bank account garnishment, they cannot legally do this after four years and cannot threaten debtors with bank account garnishment after this time period. If they sue you to recover the debt after four years, you can use the statute of limitations as a defense strategy to avoid your accounts being garnished.
Fighting Against Debt Collectors in Texas
The prospect of having your bank accounts garnished because of unpaid debts is quite scary. Dealing with debt collectors can be extremely difficult, particularly if you are in financial hardship and have no knowledge of debt collection laws in Texas. The best way to fight against the practices of debt collectors is to hire an experienced tax attorney.
With an attorney, you can deal with unpaid debts head-on and avoid your accounts being garnished. They can help you set up a payment plan with monthly installments that work within your financial range. If you owe a federal debt, they can assess whether you are entitled to federal relief or a reduction of your debt.
If your account has already been frozen because of unpaid debt, the first thing to do is contact your bank and find out why. If there is a judgment against you, you have a short time period to fight against the garnishment in court. An attorney can help you fight against it by challenging the debt and debt collector practices in court.
If you have personal assets that should be protected, like your primary residence and certain personal property, your attorney can submit a Protected Property Claim Form on your behalf. This will ensure that you do not lose access to personal assets and property because of unpaid commercial debts.
Contact Ronald Arthur Stearns Sr. PLLC Today!
Bank account garnishments cause significant financial strain for people with unpaid debts. When you go to an ATM one day and cannot withdraw money because your account has been frozen, it is extremely overwhelming. A debt collector cannot take money from your bank account without authorization. However, you may not receive notification of bank levies until after your account has been frozen.
Therefore, contacting a tax attorney as soon as you receive notification of debt is vital. The best way to avoid your bank account from being garnished is by dealing with the unpaid debt immediately. If you are in a difficult financial situation and cannot currently pay back the debt, an attorney can help you set up a fair payment plan and protect your personal property.
Ronald Arthur Stearns Sr. PLLC has spent over 26 years fighting for the rights of Texas taxpayers. Throughout his many years of practice as a tax attorney, he has gained a notable reputation for being an aggressive attorney. He understands the financial challenges faced by ordinary taxpayers and he wants to do everything he can to protect them.
Ronald Arthur Stearns Sr. has an A+ Better Business Bureau Rating (BBB) and has been recognized by the State Bar of Texas and the American Bar Association. His unique experience and skills are what you need to protect your assets against the tough practices of debt collectors.
Call our law firm at 210-853-2135 to schedule a consultation with a Texas debt collection attorney today!