My ex-spouse has a judgment against me. Can my accounts be frozen? Can I lose my Social Security or pension?
I live in the state of Florida. Due to a divorce sometime back, a judgment lien from my ex was placed against me. I am not working and on unemployment right now. I will be collecting social security at the end of this year. My question: My ex-spouse is attempting to place a freeze in the near future on my bank account. All I have is my unemployment check of $275 every week going into that account. I was told that he could not garnish any of these funds....is that true? Depending on whether it is true or not, does he have any power to freeze this account anyway? I need to know if I should start to have paper checks sent to me. Also, at the end of this year when I turn 62, I will file for social security. Can he have any access pertaining to garnishment for Social Security? Right now, I am very worried about keeping this account open not knowing what he can and cannot do.
An account freeze prevents any transactions from occurring in the account.
There are three circumstances under which a bank, credit union, or brokerage can freeze an account. First, the financial institution can freeze an account if it believes there is suspicious activity on the account or the account is used for illegal acts. Second, the government can ask a bank to freeze an account if it has evidence the account is used for illegal activity. Finally, a account freeze can take place when the account owner dies.
It is not possible for a third party, such as an ex-spouse to effectuate an account freeze.
Levy bank accounts
You may be thinking of what is called a "levy" or "garnishment." A levy means the judgment-creditor has the right to take whatever money in a debtor's account and apply the funds to the balance of the judgment. The procedure for levying bank accounts, as well as what amount, if any, a debtor can claim as exempt from the levy, is governed by state law. Many states exempt certain amounts and certain types of funds from bank levies, so a debtor should review his or her state's laws to find if a bank account can be levied. See the Bills.com resource State Consumer Protection Laws and Exemptions for an overview of each state's rules.
To get a levy, garnishment, or lien, a creditor must first get a judgment from a court of law. (See the Bills.com resource Collections Advice to learn more about this process.)
Generally speaking, pensions are exempt from garnishment or levy. The exceptions are child support and tax liens, and other relatively rare circumstances. See the Bills.com resource Can a creditor be allowed to do Social Security garnishment? to learn more about the protections the federal government has put in place for beneficiaries of Social Security benefits.
If your pension or Social Security benefits are commingled in a an account with funds from other sources (such as gifts from friends or investment income) the contents of the entire account can be levied. Therefore, it is imperative that people who are receiving a pension or Social Security benefits have those funds deposited in an account that receives deposits from the Social Security Administration and/or the pension administrator. Insist that the bank or credit union annotate the account with the message that the source of the funds in that account are pension and Social Security benefits only, and cannot be garnished or levied.
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Did you know?
Mortgages, credit cards, student loans, personal loans, and auto loans are common types of debts. According to the NY Federal Reserve total household debt as of Q4 2022 was $16.91 trillion. Housing debt totaled $12.26 trillion and non-housing debt was $4.65 trillion.
A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by Urban.org from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.
The amount of debt and debt in collections vary by state. For example, in Indiana, 28% have any kind of debt in collections and the median debt in collections is $1721. Medical debt is common and 16% have that in collections. The median medical debt in collections is $748.
Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.