Which States Protect Bank Accounts from Creditors? (2023)

If you are facing garnishment or a frozen account, there are several ways to protect your account, including opening one in a state that provides protection against either garnishment or freezing.


So, which states offer this protection? And what about the other states – is there any way to protect your bank account during bankruptcy proceedings? Keep reading to find out!

Garnishment Versus Freezing


Garnishment means that a certain percentage of your wages/salary is taken by your employer and used to pay off an outstanding debt. A creditor can file a lawsuit and be granted a garnishment.


The federal and state governments can garnish your wages without a court hearing. This is usually done in cases of outstanding child support or back taxes. You will get either a court summons or a formal letter from the agency.


Do not ignore either. If you’d like more information on dealing with a summons, check out this
article.


Freezing an account is properly known as levying. When an account is levied, the bank will not allow you to remove money from your account. You can put money in but you can not get it back. As with garnishment, both creditors and the government can levy an account.


Creditors must sue in court and be named as a judgment creditor. At that point, the creditor can seize funds within your account. The government can freeze an account without a court hearing.


Federal law
limits the amount that can be garnished to 25% of your net income (take-home pay) or 30 times the federal minimum wage ($217.50 at time of writing), whichever is less. If you owe student loans, your garnishment is limited to 15% of your net income.


Child support and alimony garnishment range from 50% to 65% of your net income, depending on your situation.


There are legal ways to recover at least living expenses. Contact the court immediately.

Which Funds are Protected?


There are a number of sources of income that are protected by law. These include:

  • Federal monies
  • Social Security and Supplement Social Security Income (SSI)
  • Veterans’ benefits
  • Federal, civil service, and railroad retirement benefits
  • Student loan and financial aid disbursements
  • FEMA aid
  • State monies (in general)
  • Public assistance
  • Workers compensation
  • State retirement benefits
  • Unemployment benefits
  • Disability benefits
  • Other income depending on state laws
  • Child support
  • Alimony
  • Certain insurance benefits
  • Retirement and pension benefits

Keeping these funds separate from non-exempt income will help protect these funds from garnishment or levying.

How States Protect Against Garnishment


Each state has different laws that govern wage garnishment for both consumer and government claims. Always double check the laws with your state as laws change frequently. An * indicates that all or some garnishments are suspended in that state.


States that prohibit wage garnishment for consumer debt:

  • North Carolina
  • Pennsylvania
  • South Carolina
  • Texas


States that follow federal guidelines with exemptions as listed:

  • Arizona
  • Arkansas
  • If debtor is laborer or mechanic, the following is exempt:
  • 60 days of wages
  • first $25 earned per week after 60 days
  • Florida
  • If debtor is a head of family (provides more than one-half of the support for a child or other person) and making $750 or less per week, 100% is protected
  • Georgia
  • Idaho
  • Indiana
  • If debtor can prove that the amount should be reduced, it is 10 % to 25% of debtor's disposable income
  • Kansas
  • Kentucky*
  • Louisiana
  • Maryland
  • Michigan
  • Mississippi
  • First 30 days of wages after garnishment order is served are exempt
  • Missouri
  • If debtor is the head of the household, then the following
  • Exempt from garnishment, whichever is greater
  • 90% of disposable income or
  • 30 times the federal ($217.50) minimum wage
  • Montana
  • Nebraska
  • If debtor is the head of the household, then
  • Exempt from garnishment, whichever is greater
  • 85% of disposable income or
  • 30 times the federal ($217.50) minimum wage
  • Ohio
  • Oklahoma
  • Rhode Island
  • Tennessee
  • $2.50 per week for each of the debtor's dependent children under the age of 16 who reside in the state
  • Utah
  • Wyoming


States with variable exemptions, based on whichever amount is greater. * indicate that some or all garnishments are suspended:

Other states:

  • Alabama
  • Exempt from garnishment (every paycheck) whichever is greater
  • $1,000 per paycheck or
  • the first 75% of disposable earnings
  • Debtors cannot accumulate more than $1,000 in wages if claiming exception
  • Alaska
  • Exempt from garnishment, whichever is greater
  • $473 per week or
  • $743 per week if the debtor's earnings support their household, or
  • the first 75% of disposable earnings
  • Hawaii
  • Creditors may garnish
  • 5% of the first $100 in disposable income per month
  • 10% of the next $100 per month, and
  • 20% of all sums in excess of $200 per month.
  • UNLESS this amount is greater than the federal guideline amount, then federal guidelines must be used
  • Iowa
  • Sets maximum garnishable amount per year based on the debtor's income:
  • Below $12,000: Up to $250
  • $12,000 to $15,999: Up to $400
  • $16,000 to $23,999: Up to $800
  • $24,000 to $34,999: Up to $1,500
  • $35,000 to $49,999: Up to $2,000 may be garnished
  • $50,000 and above: No more than 10% of wages
  • Nevada*
  • Exempt from garnishment, whichever is greater
  • 82% of disposable earnings if gross weekly wages are $770 or less
  • 75% of disposable earnings if gross weekly wages exceed $770
  • 50 times the federal ($362.50) minimum wage
  • New Jersey
  • Exempt from garnishment
  • 90% of income if debtor's earnings are less than 250% of the federal poverty level or
  • 75% of income is exempt if debtor's earnings are more than 250% of the federal poverty level.
  • New York
  • Exempt from garnishment, whichever is greater
  • 90% of the debtor's gross earnings or
  • 75% of the debtor's disposable earnings or
  • 30 times the federal ($217.50) minimum wage
  • North Dakota
  • Exempt from garnishment, whichever is greater
  • 75% of disposable earnings or
  • 40 times the federal ($290) minimum wage
  • Plus additional $20 per week for each dependent family member who resides with the debtor
  • Oregon
  • Exempt from garnishment, whichever is greater
  • 75% of disposable earnings or
  • one of the following amounts based on the debtor's pay frequency
  • $254 per week
  • $509 per any two-week period
  • $545 for any half-month period
  • $1,090 for any one-month period
  • South Dakota
  • Exempt from garnishment, whichever is greater
  • 80% of disposable earnings or
  • 40 times the federal minimum wage
  • Plus an additional $25 per week for each dependent family member who resides with the debtor

States with Levy Protection

Some states offer levy protection, meaning that all or some of the money in an account is protected.

Unlisted:

Nebraska

Tennessee

  • California
  • Colorado
  • Florida
  • Hawaii
  • Kansas
  • Louisiana
  • Michigan
  • Minnesota
  • Mississippi
  • Montana
  • Nevada
  • Oklahoma
  • Rhode Island
  • Texas
  • Utah
  • Virginia
  • Wyoming

States protecting $1,000 or less, unless federally protected and you can prove the provenance of the money

  • Arizona ($150)
  • Arkansas ($800 or $1250)
  • Connecticut ($1,000)
  • Delaware ($500)
  • D.C. ($850)
  • Georgia ($600)
  • Idaho ($800)
  • Iowa ($100)
  • Kentucky ($1,000)
  • Maine ($400)
  • Massachusetts ($425)
  • New Jersey ($1,000)
  • North Carolina ($500)
  • Ohio ($425)
  • Oregon ($400)
  • Pennsylvania ($300)
  • Washington ($500)
  • West Virginia ($800)
  • Wisconsin ($1,000)

States protecting $1,001 - $4,999, unless federally protected and you can prove the provenance of the money

  • Alabama ($3,000)
  • Alaska ($1,820 or $2,860)
  • Illinois ($2,000)
  • Indiana ($4,000)
  • Missouri ($1,250)
  • New Mexico ($2,000)
  • New York ($2,500)
  • Vermont ($1,100)

State protecting over $5,000, unless federally protected and you can prove the provenance of the money

  • Maryland ($6,000)
  • New Hampshire ($8,000)
  • North Dakota ($7,500)
  • South Carolina ($5,000)
  • South Dakota ($6,000)

Can I Open a Bank Account in States with Garnishment and Levy Protection?


The answer to this question does not have a simple answer. First, it depends on the state laws and the individual bank’s regulations. You may be required to be a resident of that state or work in that state.


The other concern is the legality of moving money knowing that your accounts may be levied or garnished. In some cases that can be considered fraud or fraudulent conveyance. Before you move money, ask a qualified lawyer or CPA for advice.


If you'd like some other ideas, check out
How To Open a Bank Account That Cannot Be Levied.

Our Final Thoughts

If you have income from some of the protected classes, open a checking account just for those funds and have the money direct-deposited into that account. Keep all monies separate from that account.


Otherwise, answer all letters from courts, creditors, or the federal/state governments and act on each. And finally, try to keep your finances current and responsibilities taken care of. It is far easier than fighting garnishment or levies.

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