A frozen account can leave you wondering how you will pay rent, buy groceries or cover other basic needs. In Maryland, a debt collector usually cannot restrict access to your funds simply because they say you owe money. For most private consumer debts, the creditor must first file a lawsuit, prove the debt and obtain a money judgment before seeking access to your funds.
How bank garnishment usually begins
After the court enters a money judgment, the creditor may ask the court to issue a writ of garnishment, which is the formal document served on the financial institution. If the bank receives this writ, it must hold nonexempt funds in your account up to the judgment amount, including costs and interest.
What money may be protected from garnishment?
Certain funds may remain protected because of their source, particularly when they come from public benefits, support payments or legally protected income streams, including:
- Social Security benefits
- Veterans’ benefits
- Child support
- Public assistance benefits
- Qualified retirement benefits
- Workers’ compensation
- Unemployment insurance
- Alimony
Bank statements, benefit letters and deposit records can help trace protected funds and show that the money came from an exempt source.
State law requires the financial institution to leave up to $500 available when it receives the writ, although mistakes can still occur. You may also be able to claim an exemption of up to $6,000 in cash or property, but you generally must file the proper request.
What if you share funds with your spouse?
Naming both spouses on a joint account does not automatically make it exempt. However, the law may protect certain marital property, most notably accounts held as tenants by the entirety, from garnishment to satisfy a debt owed by only one spouse. If this is an issue in your case, you will usually want to raise it quickly after the account is frozen.
What should you do after a freeze?
Review the garnishment paperwork as soon as you receive it. Note the date of service of the writ on the bank because you generally must file exemption requests within 30 days. If you believe the money is protected, you can use Maryland court form DC-CV-036, Motion for Release of Property from Levy/Garnishment.
Protecting your money after a bank freeze
A frozen account does not always mean the creditor can keep the money. By acting quickly, organizing your financial records and identifying possible exemptions, you can better protect the funds you depend on for daily living expenses.