Wage Garnishment vs. Bank Levy for Collecting a Judgment

Wage garnishment and bank levies are two of the many tools judgment creditors have at their disposal. A creditor can leverage a debtor’s weekly pay and bank accounts to collect a money judgment. Is one better than the other? Are there better options than both?

Regulated by the States

The first thing to understand about both garnishment and bank levies is that they are regulated by the states. Some states allow both. Other states allow wage garnishment but not bank levies. Still others are okay with bank levies but not wage garnishment. Here are the differences between them:

1. Wage Garnishment

Under a wage garnishment scenario, a debtor’s employer is served with a garnishment notice. The employer is compelled to withhold a certain amount of the debtor’s take-home pay and forward it to the creditor or hiss representative.

There are two key aspects of wage garnishment. First is that it is an ongoing order. Wages are continuously garnished until either the debt is paid or the debtor is no longer working. Second, most states allow garnishing only a certain portion of the debtor’s disposable income.

2. Bank Levy

The bank levy is known in some states as bank account garnishment. It is a court order that compels the debtor’s bank to seize all or a portion of the debtor’s banked assets and forward them to the creditor for payment.

Unlike wage garnishment, bank levies are not ongoing. They represent a onetime seizure. There generally are no limits on the amount that can be seized.

Wage Garnishment for Sizable Debts

A big advantage of wage garnishment is reliability. Once a garnishment order is issued, the creditor sees a steady stream of income until the debt is paid. But the biggest disadvantage is the time commitment. On average, states prohibit garnishing more than 25% of a debtor’s disposable income.

Let us say a debtor’s disposable income works out to $100 weekly. Garnishment would yield only $25 weekly, or $100 monthly. That works out to only $1,200 annually. It could take years to pay off a sizable debt through garnishment alone.

Bank levees are more effective for sizable debts as long as the debtor has enough banked cash. But if not, a creditor might have to look at another strategy.

Professional Help Is Invaluable

Trying to figure this sort of thing out is where professional help generally proves itself invaluable. Professional help is available through attorneys and specialist collection agencies like Salt Lake City’s Judgment Collectors.

Judgment Collectors works on money judgments in nearly a dozen states. When garnishment and bank levies are not a realistic option, they can look at options like proper liens and writs of execution. Best of all, their team knows how to look at a case and figure out which options are likely to yield the best results.

Take a Look at Both

If you have recently won a money judgment and are now trying to figure out how to proceed, take a look at both wage garnishment and bank levies. One or the other might be workable for you. It is also possible that neither one is a good option. But you will not know until you weigh the potential benefits against any possible downsides.

Wage garnishment and bank levies represent two ways to enforce a money judgment. They tend to be best suited for cases where a debtor doesn’t have any high-value assets, and the creditor isn’t interested in settling for a lesser amount. But both need to be utilized with a realistic approach. Both represent a difficult way to collect.