Creditors that have a court judgement against a debtor can have a savings or checking account frozen in order to garnish funds, states Nolo. Creditors can send attachment papers to a bank, which gives them the authority to take money out of an account. There are some legal limitations on the types of funds creditors can freeze.
Creditors are legally mandated by the U.S. Department of Treasury to avoid seizing a percentage of monies obtained from federal benefit programs, such as Social Security, states Cleveland.com. Under the law, creditors must leave at least two months worth of funds from benefit programs in an account. These funds are automatically protected from sudden account freezes. A bank that receives an attachment from a creditor must check the account for federal benefits before allowing the removal of money. Creditors are allowed to take money from these accounts, as long as it is above the two month limit.
Federal benefits that are not legally protected from credit freezes are child support money owed to government agencies, student loans and taxes, states Cleveland.com. Government agencies, such as the IRS, can freeze accounts without a court judgement. As noted by Nolo, it is best to avoid having a bank account frozen by making payment arrangements with creditors.