What To Do If Your Bank Account Is Frozen in Texas?

Imagine checking out at the grocery store, and finding out that all of the money in your bank account is gone. That is exactly what happened to Houston resident and single mother, Leslie, in September of 2021. Confused and probably thinking that it must have been a mistake, Leslie called her bank only to find out that her accounts had been frozen as part of a debt judgment issued against her in a Harris County Court.1 

While having your wages garnished in Texas for credit card or medical bills is a rare occurrence, bank account garnishment is much more common. And unfortunately, it is sometimes only the beginning of an impending financial nightmare for those who didn’t see it coming. If you have outstanding checks that haven’t cleared yet, and your bank account has been garnished, you will likely incur bank fees for checks sent back due to insufficient funds. It can set off a costly chain reaction leading to more debt.

What is a Bank Account Garnishment

Bank account garnishment is a way for a creditor to collect on a debt after the court has issued a judgment against you. If your bank account has been frozen it is because you owe someone money. Most creditors need to sue you in court, and win a judgment before your bank account can be garnished. This is why it is so important that you respond promptly to lawsuits to avoid a default judgment. If you have received a credit card or any other type of lawsuit, it is important to contact an experienced  attorney as soon as possible to protect your interest.  Once a creditor has a judgment against you, they may obtain a writ of execution and they will garnish your bank account. It is not common for a debtor to get advance notice of a bank transfer before the account is frozen.  Like Leslie, most people are caught off guard because their account is frozen before they receive notice of the garnishment.

Is Any Income Exempt from Garnishment?

If your bank account has been frozen, there are a few possible defenses. The most common defense is that some of the money in your account is exempt or protected from creditors. 

Under Texas law the following types of income are exempt from collection by most creditors: 

• Veteran Administration benefits 
• Social Security benefits 
• Unemployment benefits 
• Child support and spousal support 
• Retirement and pension benefits 
• Money from the sale of a homestead for up to six months after the sale 
• Temporary assistance for needy families 

While the above income may be exempt from collection by most creditors, exempt income may be taken to pay court-ordered child support, spousal support, federal student loans, or federal income taxes. 2

What To Do If Your Bank Account Has Been Garnished

If your bank account has been garnished, and your money is not exempt, and you are not able to work out a payment plan with the creditor, bankruptcy may be the only way to stop the garnishment. After filing bankruptcy you will be protected by an “automatic stay”. An automatic stay is a legal injunction that stops all collection activity.  Bankruptcy will immediately stop all garnishments. While the bankruptcy clerk’s office will send notice to all creditors letting them know about your bankruptcy, your lawyer will also send a specific notification to the creditors who are garnishing your bank account demanding they immediately cease all collection efforts.

Keep in mind that although your bank account has been frozen, filing a bankruptcy will allow you to unfreeze the account and in some instances have the creditor return the money that was garnished.  This can typically be done if you act within 30 days.  This depends on if you may use Federal exemptions in your bankruptcy case.  Meeting with an experienced bankruptcy attorney will help guide and explain what options you may have available.

If you are facing bank account garnishment, contact the Pack Law. P.C. office today at (713) 980-9014 to schedule a free consultation. 

Notes

1. https://www.houstonchronicle.com/news/investigations/article/texans-delinquent-debts-court-bank-lawsuit-17136660.php
2. https://texaslawhelp.org/article/my-bank-account-has-been-frozen-what-do-i-do-now