By : Amy Lewis
Debt is taking a serious shape in the face of the global economy. Most of the people in the US incurred overwhelming debt after the great economic meltdown. The senior citizens of Texas complicated their financial situation when they defaulted on payments. Most of these people who retired are skeptical whether their retirement check can be garnished for a debt in Texas. In most of the cases, the creditors may attempt to garnish wages of the defaulters to retrieve the owe amount. Well, there are certain types of income that the creditor may not be able to garnish legally. If you’re not aware of it, then you can continue reading the article for more information.
What is Garnishment?
If you default on your payment, then the creditors may send the account to the collection agency. In case you do not pay, the collection agency may sue you in the court. If the court passes judgment in favor of the creditors, then garnishing wages is a common attempt to collect the owed amount. In certain situations, the creditors or the collection agencies may confiscate your property and sell to retrieve the owed amount.
Are you aware of the prevailing law in Texas?
According to the Texas law, the creditors are not allowed to garnish wages for consumer debt or debts resulting from breach of contract. Therefore, in most of the cases, the creditors in Texas can’t garnish the retirement check. The federal law does not allow the creditors to garnish social security retirement income for consumer debts or breach of contract in any state. But you need to be aware of the certain laws prevailing in other states. If you incurred debt in a state that allows creditors to garnish other types of retirement income, then the creditors may garnish retirement checks you receive in Texas.
Texas Garnishment rules are found in Title 3, Chapter 63. Under CP § 63.004, it states that “Except as otherwise provided by state or federal law, current wages for personal service are not subject to garnishment.”
Although garnishment of Social Security benefits or pensions for consumer debt is not permissible under federal law. But garnishment of Social Security and pensions may be allowed for child support in Texas.
What are the exemptions and limitations in Texas?
In Texas, creditors are not allowed to garnish wages for most types of debts. However, creditors can be allowed to garnish wages for child support, alimony, government debts and student loans. Therefore, your retirement benefits that are inclusive of the social security benefits can be garnished by the creditors to satisfy these debts. The creditors are allowed to garnish up to 60% of your wages if you incur tax debt or child support. But the creditors are not allowed to garnish more than 25% of the income, only if you incur debt due to alimony, student loans or other government debts.
What is levying bank account?
According to the Texas law, the creditors are not allowed to confiscate funds in borrowers’ bank accounts for unpaid debt. In order to seize the account, the creditors are required to obtain a judgment and writ of execution. Therefore, if you have deposited your wages into the account, then you may enjoy the benefits of exemption from the creditor’s garnishment. This is because the creditor may not be legally able to seize your wages from the account.
In Texas, a levy or attachment is allowed under Title 3, Subtitle A, Chapter 59. Remember, levy is allowed if the petitioner possesses a legal notice of levy commanding the financial institution for a claim against the account.
Therefore, you can manage to secure your retirement account from garnishment. But you need to be careful when you owe certain types of debt, as the creditor may garnish your retirement benefit to retrieve the owed amount. If you have certain types of debts like alimony, child support, then it is advisable to, payout.