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Illinois wage deduction attorney

When it comes to wage garnishment, if you are tasked with collecting debt on behalf of a bank, credit union, or finance company, seizing funds from a debtor’s paycheck through garnishment or wage deductions is often a last-resort strategy for you to use in recouping your organization’s funds. With that being said, if you are faced with the need to garnish a debtor’s paycheck or other earnings, you should know just what types of funds or income can be garnished in Illinois. 

What Can Be Garnished

In general, according to Title III of the Consumer Credit Protection Act (CCPA), a person’s earnings can be garnished to collect on debts. Per the CCPA, earnings is defined as:

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How Joint Bank Accounts Affect GarnishmentWhen you receive a favorable judgment against a debtor in a lawsuit, you will have a variety of sources from which you can retrieve the debt owed to you. Many people hold a majority of their money in bank accounts, and you can use non-wage garnishment to access that money if the debtor has not been using it to repay you. When you receive a garnishment order from the court, the debtor or other interested parties have an opportunity to contest the order and protect that money. In some cases, a person who shares the account with the debtor may try to block your garnishment order.

Non-Wage Garnishment

First, let us review the rules of non-wage garnishment during debt collection. Non-wage garnishment is a court order to withdraw money from sources other than the debtor’s pay from work. Bank accounts and physical assets are the most common sources for non-wage garnishment and can potentially be more valuable than the debtor’s wages. However, there are restrictions on non-wage garnishment:

  • The debtor has several exemptions to protect assets, including a $4,000 wild card exemption that can be used on any asset.
  • Illinois law exempts money awarded to the debtor through a personal injury or workers’ compensation case.
  • Illinois also exempts money in retirement and life insurance plans, unless the creditor can prove that the debtor created these accounts in bad faith in order to protect the money from garnishment.

Joint Accounts

The co-owner of a debtor’s bank account can stop a creditor from garnishing money from the account if a majority of the money came from them and not the debtor. The creditor bears the initial burden of proving that the account belongs to the debtor and should be eligible for garnishment. After the creditor proves this, the joint account holder is the one who must prove through deposit slips and receipts that they are the source of the majority of the money. Joint accounts are typically held between spouses or business partners, who in some cases may have debts that are not shared between each other.

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Using Non-Wage Garnishment to Collect DebtsWhen Illinois creditors use court action to retrieve debts, they can collect from debtor wages or other assets. With some exemptions, creditors can claim part or all of a variety of assets and properties. Non-wage garnishment can give creditors access to assets of greater value than what can be deducted from a debtor’s wages, as long as the assets are not exempt.

Bank Accounts

Banks are the most common source for non-wage garnishment. Once a court affirms that a debtor is liable, the creditor can serve the debtor and the debtor’s bank with a garnishment notice. Once it receives the notice, the bank must freeze the debtor’s accounts until a court rules on the garnishment. Banks will typically receive the notice a couple of days before the debtor to prevent the debtor from avoiding garnishment by withdrawing money from an account.

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