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What property can be protected from judgment creditors?

Money & Debt

This article discusses the types of property that are protected (or "exempt") from being taken by creditors to pay debt judgments. 

What is a judgment creditor?

A judgment creditor is a person or company that has sued and won a case for money damages. A judgment creditor can be someone who won a lawsuit over past-due debts (such as unpaid credit cards, medical bills, etc), but it can also be someone who won any civil lawsuit that resulted in a judgment for money. 

The person who owes the judgment creditor money is referred to as a "judgment debtor."

Is my paycheck protected from creditors?

Creditors sometimes seek to take money from your paycheck through your employer, but under Texas law, "current wages" cannot be taken through your employer to pay consumer debts or other types of debt judgments.  See Texas Property Code 42.001

Once you or your employer deposits your paycheck into a bank account, that money may no longer be protected from creditors. In a garnishment action, wages deposited into your bank account can be garnished by your bank. But, in a receivership, wages deposited into your bank account may be protected. See Turnover Receivers and Debt Collection for more information on protecting paychecks in receivership.

Although your wages cannot be garnished through your employer to pay consumer debt judgments, your wages can be garnished through your employer to pay court-ordered child support, spousal support, alimony, and certain federal debt (like income taxes, other IRS debt, or federal student loans). 

Is my Social Security protected from creditors?

Yes, Social Security benefits are protected and cannot be taken by debt collectors for consumer debts. See42 USC  407. If your Social Security is directly deposited into your bank account, the bank must protect 2 months worth of those benefits and allow you access to that amount, even if other nonexempt funds in your account are frozen. 

It is a good idea to set up a separate bank account for your social security income to prevent any future problems. This makes it easy to prove the source of the funds. You can also file what is called an "anti-garnishment letter" with the bank that can keep your account from being frozen. For more information on how to protect your Social Security and a sample anti-garnishment letter, click here.

It is important to note that, like wages, Social Security income can be garnished to pay certain debts including court-ordered child support, spousal support, alimony, and federal debt (like income taxes, other IRS debt, or federal student loans). 

What other types of benefits and income are protected?

Like Social Security, many other types of income you may receive are protected ("exempt") from being taken by judgment creditors.

  • Veterans Administration benefits
  • Workers’ compensation benefits
  • Temporary Assistance for Needy Families (“TANF”) funds
  • Unemployment benefits
  • Child support, alimony, and spousal support
  • Life insurance and annuity benefits
  • Railroad Retirement Board benefits
  • Office of Personnel Management retirement benefits
  • Pension and retirement benefits
  • FEMA disaster benefits
  • Unpaid commissions for services performed (up to $12,500 for a single person or $25,000 for a family).

In addition to the above benefits, a few other types of savings accounts and money can be protected, such as:

  • Proceeds from the sale of a homestead (for up to 6 months after the sale)
  • Tax-deferred retirement accounts, like 401(k) and IRA accounts
  • Education savings accounts
  • Health savings accounts

Like social security and wages, most of these can be garnished to pay court-ordered child support, spousal support, alimony, and certain federal debt (like income taxes, other IRS debt, or federal student loans).

See Texas Property Code, Chapter 42 for a complete list of exemptions under state law.

Is my house protected from creditors?

Your homestead, which is the home you live in most of the time, is protected from most judgment creditors. A homestead can include up to 10 acres of urban property (single or family) and up to 100 acres of rural property (single) and 200 acres (family). Proceeds from the sale of your homestead are also protected for up to 6 months after the sale.

See Texas Property Code Chapter 41 for more information on homestead exemptions.

Even with these protections, if you are behind on your mortgage, property taxes, or home equity loan payments, those creditors can foreclose on your home.  For more information on foreclosure, you can read the Foreclosure Fact Sheet.

What other types of personal property are protected from creditors?

Texas law also protects other types of property from being taken to pay judgment creditors. Most creditors will first try to take your bank accounts and other money that they can easily access, but some creditors will also seek to take physical property that they can sell to satisfy judgments. Certain physical property is also protected from being taken by creditors. including:

  • 1 vehicle for each member of the family with a driver's license
  • Professionally prescribed health aids
  • Religious bible or other sacred religious book

Other property can also be protected, but the maximum value of the following items in total is $50,000 for an individual (or $100,000 for a family)

  • Home furnishings, including family heirlooms
  • Food and similar items for consumption
  • Farming or ranching vehicles and implements
  • Tools and equipment used for a job
  • Clothes
  • Jewelry (up to a total value of $12,500 for a single person or $25,000 for a family)
  • 2 firearms
  • Athletic and sporting equipment
  • 2 horses, mules, or donkeys with food and riding equipment
  • 12 head of cattle with food
  • 60 head of other livestock with food
  • 120 fowl with food
  • Household pets

See Texas Property Code Chapter 42 for a complete list of exemptions under state law.

If a creditor takes my protected property, what can I do to get it back?

Once property has been taken to pay a debt (usually by garnishment or a receiver), a creditor must send you a "Protected Property Claim Form" that you can turn in to get any protected funds returned to you. Complete this form and file it with the court as soon as possible.

If you wait more than 14 days to file this form, your property may be sold or released to the creditor.

For more information on the Protected Property Claim Form and how to fill it out, read the Exempt Property guide

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