When can a creditor garnish my wages, place a lien on my house, seize my bank account, or take my tax refund?

When can a creditor garnish my wages, place a lien on my house, seize my bank account, or take my tax refund?

For the most part, a creditor must sue you, obtain a court judgment, and then solicit the help of a sheriff or other law enforcement officer to garnish wages. Even then, the maximum the creditor can take is 25% of your net pay, and you can protest that in court if you can't live on only 75% of your wages.

In three situations, your wages may be garnished before you are sued:

• The IRS can take everything but about $100 per week.
• The Department of Education can garnish up to 15% of your wages and a state guarantee agency can garnish up to 10% of your wages if you're in default on a student loan.
• Up to 50% of your wages can be garnished to pay child support or alimony.

To place a lien on your house or empty your bank account, almost all creditors must first sue you, get a judgment, and then use a law enforcement officer. A few types of creditors, such as an unpaid contractor who worked on your house, can put a lien on your house without suing. And the IRS can place a lien or empty your bank account without suing first.

Your tax refund cannot be taken unless the Treasury Department receives such a request from the IRS, the Department of Education, or a child support collection agency.

Can I go to jail for not paying my debts?

Debtors' prisons were eliminated in the United States by 1850. In a few unusual situations, however, you can still be jailed if you:

• willfully violate a court order, especially an order to pay child support
• are convicted of willfully refusing to pay income taxes, or
• are about to conceal yourself or your property to avoid paying a debt for which a creditor has a judgment against you.

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