Texas Wage and Bank Account Protection

A Texas judgment creditor cannot garnish a paycheck. Current wages for personal service are exempt from garnishment on any ordinary money judgment, whether the debt is a credit card, a tort verdict or a business claim. Texas is one of four states that leave a private creditor no general wage-garnishment remedy. The exceptions are court-ordered child support and spousal maintenance, plus federal claims such as unpaid taxes.

Nothing similar protects the bank account. Texas exempts no money on deposit. Once the bank is served with a writ of garnishment, a deposited paycheck is frozen with everything else in the account, and no grace period follows the deposit. Texas has exactly one sixty-day exemption, for retirement-plan distributions, and it runs from the day of the distribution.

Can a Creditor Garnish Wages in Texas?

No, a private judgment creditor in Texas cannot garnish current wages for personal service, and the kind of debt behind the judgment makes no difference. The same rule is written in three places.

The Texas Constitution provides that “[n]o current wages for personal service shall ever be subject to garnishment,” and it names the only two exceptions, court-ordered child support and spousal maintenance (Tex. Const. art. XVI, § 28). The Civil Practice and Remedies Code repeats the rule and discharges the employer, as garnishee, from any debt it owes the employee for current wages. The Property Code lists current wages among the personal property exempt from seizure, outside the dollar cap that limits the rest of the list.

Only a short list of claims gets past the bar. The constitution itself allows garnishment for court-ordered child support and spousal maintenance, the second added by amendment in 1999. The garnishment statute opens with the words “Except as otherwise provided by state or federal law” (Tex. Civ. Prac. & Rem. Code § 63.004), and the federal government collects a tax debt or a defaulted student loan from a paycheck under its own rules.

Current wages means compensation for personal service, whatever the employer calls it. The Houston court of appeals held in 2007, in General Electric Capital Corp. v. ICO, Inc., that a severance payment was current wages. The name on the payment does not control; a severance payment is read as a bonus for the employee’s service unless the contract says otherwise.

Commissions get narrower protection. Unpaid commissions for personal services are exempt only up to a quarter of the personal-property cap, and unlike wages they count against that cap.

The exemption can be lost by the employee’s own choice. Wages left with the employer voluntarily, and drawn only as needed, can lose the exemption, because the employee has used the employer as a bank. The Houston court set a high threshold for that loss. A contractual right to be paid is not control of the money, and an employee who negotiates with a slow-paying employer instead of suing has not left the wages there voluntarily.

Are Wages Protected After They Are Deposited in Texas?

No, a paycheck loses its Texas protection the moment it is deposited. The wage exemption covers current wages, meaning the pay the employer still owes, and no Texas statute exempts money sitting in a bank account. A creditor barred from the paycheck can garnish the account it lands in, and the entire balance is exposed.

There is no sixty-day protection for deposited wages in Texas. No Texas statute gives wages a grace period after deposit, and no Texas exemption follows a paycheck into the account for any number of days. The state’s one sixty-day exemption covers money distributed from a retirement plan; it stays exempt for sixty days after the distribution, and after that only if it is rolled over.

Several states, listed on the garnishment chart, let a paycheck keep its exemption for a set period after deposit if the money can be traced to wages. Texas is not among them. The rolling sixty-day rule for deposited earnings is North Carolina’s, and even there it depends on a family-support affidavit.

A writ reaches whatever is in the account on the day the bank is served. A creditor who knows the payday can serve the bank the next morning.

Turnover Orders and Wages in Texas

A Texas turnover order cannot reach wages either, before the employer pays them or after. The turnover statute lets a court order a judgment debtor to hand over nonexempt property, or appoint a receiver to take and sell it, and the court can enforce the order by contempt. Two limits keep wages out of it.

The first limit covers unpaid wages. Since 1991 no Texas court may order the debtor, or anyone else, to turn over wages for personal services before the debtor has been paid them, whether the wages take the form of a paycheck, cash or property. The second covers the proceeds of exempt property. A court may not order the turnover of the proceeds or the disbursement of property that any statute exempts, and current wages are exempt property. Both limits give way for child support.

The Supreme Court of Texas applied the second limit to wages already received. In Caulley v. Caulley, decided in 1991, a trial court had ordered a debtor to hand a receiver nearly all of his monthly take-home pay. The Supreme Court reversed, holding that a bar on the proceeds of exempt property necessarily bars the proceeds of current wages. It decided nothing about the constitution’s garnishment clause. One justice, concurring, would have held that an order to turn over a paycheck has the same effect as a garnishment.

Whether paid wages are reachable depends on which process the creditor chooses. An older line of cases treated wages as no longer current once the employee received them. For a turnover order that line is gone, because the courts of appeals read the 1989 amendment as overruling it, as the Houston court did in Goebel v. Brandley in 2005.

For a writ of garnishment the older rule is still stated as law, and a deposited paycheck is taken. The two lines have not been reconciled, so the same dollars are safe from one post-judgment remedy and exposed to the other.

Wages routed away before the employee receives them are not a transfer a creditor can undo. In Goebel, a mother had spent years buying savings bonds titled to her children through payroll deductions, starting long before the judgment. The court held the purchases were not fraudulent transfers. The fraudulent transfer act’s definition of an asset excludes exempt property, and the deducted wages were current wages she never received.

The creditor argued that she could have cancelled the deductions and so had constructively received the money, and the court found no authority for that theory. Caulley and Goebel are two of the decisions in the Texas asset protection case law library that mark where the wage exemption stops.

Can a Creditor Garnish a Bank Account in Texas?

Yes, a judgment creditor can garnish a Texas bank account, because Texas gives a bank balance no exemption at all. Money that was exempt at its source keeps that protection in the account only where a specific rule carries it through. The personal-property exemption is a closed list of eleven categories under a dollar cap. No category on the list is cash, a deposit account, a brokerage account or a security.

Courts do not add to the list. In In re Crockett, decided in 1998, the Fifth Circuit refused to treat a wave runner as athletic or sporting equipment. The tools-of-trade category expressly includes boats and motor vehicles, the sporting category omits them, and the court read the omission as a legislative choice. Texas reads its exemption statutes liberally, but liberal construction does not add a category the legislature left out.

Texas caps the listed property at a total value set by statute for a family and for a single adult. Jewelry counts only up to a quarter of that cap. Everything outside the list, from a brokerage account to the checking account, is reachable in full.

A judgment creditor reaches the account by a writ of garnishment against the bank. The writ issues to a creditor holding a valid, subsisting judgment who swears that, as far as it knows, the debtor lacks enough property in Texas subject to execution to pay it. The writ goes to the registered-agent address the bank has on file with the secretary of state. Where the bank has filed that registration, service anywhere else is not effective as to the bank.

From the moment of service the bank may not pay the account holder, and a payment it makes anyway is void as to the creditor up to the amount claimed. The bank’s job is to comply. The Finance Code puts the burden of stopping or limiting the bank’s response on the customer. The customer must go to court for a restraining order, an injunction or a protective order that suspends it. A Texan whose account is frozen therefore contests the writ in court while the balance sits with the bank.

Which side must prove that money is exempt is itself unsettled in Texas. In a turnover proceeding the creditor shows that the debtor owns the property, and the debtor must then prove the exemption. A Houston court of appeals stated that rule in Klinek v. LuxeYard, Inc. in 2023, and recorded beside it that the Supreme Court of Texas has never squarely declared which party carries the burden. Decisions in the intermediate courts, it added, are unclear or inconsistent.

A spouse’s account is reachable under the community-property rules rather than by joint titling. A judgment against one spouse can be collected from that spouse’s separate property, from whatever community property that spouse alone manages, and from everything the couple manages jointly. Each spouse alone manages the community property that spouse would have owned if single, starting with personal earnings, but earnings both spouses deposit in a single account fall under joint management unless they agree otherwise.

The other spouse’s separate property is beyond the judgment, and so is the community property under that spouse’s sole management, unless the debt is a tort claim arising during the marriage or one both spouses owe. A joint bank account can be garnished for one owner’s debt, and Texas has no tenancy by the entirety to put a couple’s account beyond a creditor of one spouse. The non-debtor spouse recovers only what the marital-property rules leave outside the judgment.

Spouses can partition community property into separate property by agreement. A creditor who was already there when the spouses signed, and whom the agreement was meant to defraud, can treat it as void.

Money That Stays Exempt in a Texas Account

Some money keeps its exemption after it reaches a Texas account, because the exemption attaches to the money’s source rather than to the account. The clearest case is federal benefits. When a garnishment order arrives at the bank, federal law makes the bank protect an amount up to two months of benefits that Social Security, the VA, the Railroad Retirement Board or the federal civilian retirement system deposited directly into the account. The protection is automatic, needs no claim by the account holder, and is capped at the account balance when the balance is lower.

The federal rule has four limits. It covers only those four benefit programs and only direct deposits, so a benefit check cashed and deposited by hand gets no automatic protection and must be claimed as exempt under state procedure. It responds to a garnishment order from a court or a state agency. A federal tax levy sits outside it, and so does a child-support or federal-debt order that arrives with a federal notice of the right to garnish benefits.

Anything above the protected amount is treated as ordinary money and frozen until the account holder proves its source. An exempt bank account is built around that rule in every state, Texas included.

Texas adds a few source-based exemptions of its own. Homestead sale proceeds stay exempt for six months after the sale. Money distributed from a retirement plan or IRA stays exempt for sixty days, and indefinitely if it is rolled over. Child support, alimony and separate maintenance the debtor receives are exempt outside the personal-property cap. Life insurance and annuity benefits, including cash value and proceeds, are exempt before and after they are paid.

An account holder who mixes that money with other deposits takes on the job of proving which dollars came from where. The fix is one account per exempt source.

An account that receives only federal benefits, or only a retirement distribution, or only homestead proceeds carries its own proof. A levy freezes everything in a mixed account, apart from the federal protected amount, until the account holder proves where the money came from.

A Texan’s Planning Options Under the Wage Rule

Texas wages are safest in the employer’s hands, where neither a garnishment writ nor a turnover order can reach them, and they stay safe only until the employee takes possession. Wages an employee never receives are out of a garnishing creditor’s reach, and a payroll deduction can send them into a retirement plan the statute exempts without a cap. On Goebel‘s reasoning the deduction moves no asset the fraudulent transfer act can undo, and the deductions in that case had run for years before the judgment.

The bank account is the exposure. Whatever a Texan holds in cash, deposits or brokerage accounts is reachable in full the day a writ is served. Asset protection in Texas rests on exemptions, and the exemptions stop at the bank.

A Texan with large cash and brokerage balances looks to an offshore trust, whose licensed trustee abroad holds those liquid assets. Offshore planning starts to make sense at $500,000 of liquid money no exemption reaches, or $1 million of wealth all told. A Texas garnishment writ cannot be served on a bank abroad that has no office in the United States.