
Ohio residents with credit card debts may be interested in finding out if credit card companies can garnish their retirement funds. While some personal accounts are exempt from garnishment in many circumstances, others are not.
First of all, a credit card company or another financial firm must file a lawsuit against a borrower before the borrower's funds are threatened. Then, the creditor must strictly adhere to certain state and federal laws before it can seize the borrower's funds. Certain funds associated with federal benefits and retirement are exempt from seizure, such as U.S. Department of Veterans Affairs pensions, 401(k) plans, IRAs and Social Security payments. This rule changes, however, once the owner of the funds begins withdrawing from them and deposits the money into his or her checking account.
A staff attorney for Consumers Union stated that once the collector or the creditor wins a judgment against the borrower, then all the money in the borrower's account can be seized up to the amount of the debt. However, the company can levy the person's account only once per approval. Therefore, if the creditor is not able to collect the full amount of the debt from the borrower's account, it must file for another garnishment procedure and secure approval in order to proceed again.
People who feel overwhelmed with credit card debt may be able to get their debts lowered or completely discharged by filing a Chapter 7 or Chapter 13 bankruptcy. While both types of filings will stop creditor harassments, garnishments and foreclosures, each filing has its own benefits and disadvantages. An attorney who is knowledgeable about Ohio's bankruptcy laws could guide a client in choosing the right type of debt relief for his or her needs.
Source: Fox Business, "Can Credit Card Company Garnish IRA?", Jeanine Skowronski, July 10, 2014
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