Wage Accounts and Protecting Deposited Earnings in Florida

Florida’s head of household exemption under Section 222.11 of the Florida Statutes protects wages from garnishment before and after deposit into a bank account. A wage account is a bank account used exclusively, or at least primarily, for receiving direct deposits of exempt wages. The strategy is designed to simplify the tracing of protected earnings if a creditor serves a writ of garnishment.

Florida law does not require a separate wage account to preserve the exemption. Section 222.11(3) expressly provides that commingling earnings with other funds does not by itself defeat the ability to trace protected earnings. A dedicated wage account is a practical tool, not a legal requirement—but it can make the difference between a quick release of frozen funds and a prolonged court fight over tracing.

Head of Household Wage Exemption

Florida’s wage garnishment exemption is among the broadest in the country. Section 222.11 provides that a creditor may not garnish earnings payable to a debtor who qualifies as head of household. “Earnings” includes wages, salary, commissions, and bonuses paid as compensation for personal labor or services.

Qualifying as Head of Household

A debtor qualifies as head of household by providing more than one-half of the financial support for a child or other dependent. The dependent does not need to live in the debtor’s home, and the dependent’s own partial income does not disqualify the debtor as long as the debtor’s contributions exceed 50% of the dependent’s total support.

Dependents for purposes of the wage exemption are not limited to tax dependents. The statute encompasses any person to whom the debtor has a legal or moral obligation of support, including a child, a spouse, an elderly parent, or another family member.

Only one spouse can qualify as head of household for the same household. When both spouses earn income, the higher-earning spouse who provides more than half the support for the couple’s children is typically the one who qualifies.

Income Thresholds and Waiver Rules

All disposable earnings of a head of household earning $750 per week or less in net pay are fully exempt from garnishment. Disposable earnings above $750 per week are also exempt unless the debtor has agreed to garnishment in writing.

Written waivers of the head of household exemption appear in many loan documents. Florida law requires that a valid waiver be presented in a separate document attached to the debt agreement and printed in at least 14-point type. The waiver must clearly describe the wage garnishment exemption. Despite these requirements, borrowers routinely sign waivers without realizing their significance. In bankruptcy, Section 522(e) of the Bankruptcy Code invalidates waivers signed in favor of unsecured creditors, which means Florida exempt assets can sometimes be reclaimed even after a waiver.

The Six-Month Protection Window

Exempt earnings deposited into a bank account remain protected from garnishment for six months after the financial institution receives them. Section 222.11(3) codifies this protection and establishes that the debtor must be able to trace and properly identify the deposited funds as earnings.

The six-month window begins on the date the financial institution receives each deposit, not on the date of the most recent deposit. Wages deposited seven months ago have lost their exempt status even if last week’s deposit is still protected.

Over time, as older deposits age past six months and the debtor spends or transfers funds, the protected balance in the account shifts. A debtor who deposits $3,000 in wages each month and spends $2,800 on expenses will have a relatively small exempt balance at any given time, which makes the account less attractive as a garnishment target.

When a creditor serves a garnishment writ, the bank freezes the account regardless of whether the funds are exempt. The debtor must then file a claim of exemption with the court and present documentation including pay stubs, bank statements showing direct deposits, and tax returns confirming head of household status. If the debtor can demonstrate that all or substantially all of the frozen funds trace to wage deposits made within the prior six months, the court should release the funds.

Why a Separate Wage Account Helps

Florida law does not require depositing exempt wages into a dedicated account, but segregation substantially simplifies the tracing burden if a garnishment occurs.

The Commingling Problem

When a debtor deposits wages into an account that also receives rental income, investment dividends, business distributions, or transfers from a spouse, the tracing analysis becomes complicated. Each deposit must be individually identified and categorized. Withdrawals must be allocated between exempt and non-exempt funds, which often requires applying a first-in-first-out or lowest-intermediate-balance method. The more sources of income flowing into a single account, the more difficult it becomes to prove which remaining dollars are exempt wages.

Section 222.11(3) states that commingling does not “by itself” defeat tracing. The word choice is significant—commingling alone is not fatal, but commingling combined with poor records, unexplained withdrawals, or an inability to reconstruct the deposit history can result in a court denying the exemption claim.

How a Wage Account Works in Practice

A wage account receives only the debtor’s payroll direct deposits. No other income enters the account. Household bills and personal expenses are paid from a separate operating account, and the debtor periodically transfers funds from the wage account to the operating account.

If a creditor garnishes the wage account, every dollar in the account traces to exempt wages. The debtor’s claim of exemption is straightforward, and the court can release the funds without a complicated tracing analysis. If the creditor garnishes the operating account instead, that account may contain a mix of exempt transfers from the wage account and non-exempt income, but the debtor can still trace the transferred funds back to their wage-deposit origin using bank statements from both accounts.

The key discipline is maintaining the separation over time. A single non-wage deposit into the wage account, such as a birthday check from a relative, a refund, or a transfer from a business account, undermines the simplicity of the tracing argument.

Business Owners and the Employee Status Problem

Self-employed individuals and business owners face a threshold issue that wage-earning employees do not: whether their income qualifies as “earnings” under Section 222.11 at all.

Florida bankruptcy courts have denied the head of household exemption to sole owners of LLCs and S-corporations who pay themselves through discretionary draws rather than through a regular payroll. Courts in these cases characterized the payments as profit distributions rather than wages, concluding that the owner controlled both the timing and amount of payments in a manner inconsistent with an employer-employee relationship.

Several factors weighed against the owners in those rulings: the salary amount fluctuated with business cash flow, there was no written employment agreement, and the owner did not withhold employment taxes in the same manner as for unrelated employees.

A business owner who wants to preserve the wage exemption should structure compensation to resemble a genuine employment relationship. A written employment agreement should specify a fixed salary amount. Payroll should be processed through a payroll service that withholds employment taxes. The salary should remain consistent regardless of monthly fluctuations in business revenue, and profit distributions should be paid separately from salary.

Even with these precautions, a creditor can challenge the exemption, and the outcome will depend on whether the court views the arrangement as a genuine employment relationship or as a self-serving reclassification of business income.

Independent contractors who receive payments from clients rather than from an employer generally cannot claim the head of household wage exemption because their income does not constitute “earnings” as defined by the statute. Contract payments are compensation for services rendered, but they are not wages payable by an employer.

Interaction with Tenancy by the Entirety

A married debtor who qualifies as head of household may deposit wages into a bank account held as tenancy by the entirety with a spouse. The wage exemption and the entireties exemption can coexist, creating overlapping layers of protection.

Depositing exempt wages into an entireties account does not destroy the wage exemption. The funds retain their exempt character for six months after deposit, and the account itself is protected from garnishment by a creditor of one spouse alone. If the wage exemption expires after six months, the entireties protection continues as long as the judgment runs against only one spouse. Conversely, if both spouses are jointly liable on the debt, eliminating the entireties protection, the wage exemption still applies to the head of household spouse’s traced deposits within the six-month window.

The combination is particularly valuable for married couples where one spouse faces creditor exposure. The wage-earning spouse deposits payroll into the entireties account, maintaining both protections simultaneously. The only scenario in which both protections fail is a joint judgment against both spouses where the deposited wages have aged past six months.

Federal Benefit Deposits

Federal benefits including Social Security, Supplemental Security Income, Veterans Affairs disability, Railroad Retirement, and federal civilian and military retirement receive automatic protection under 31 CFR Part 212 when deposited by direct deposit. Banks must automatically protect two months’ worth of benefit deposits from garnishment without any action by the account holder.

Federal benefit protection operates independently of Florida’s wage exemption. A debtor who receives both wages and Social Security in the same account benefits from both protections, but the tracing analysis for each operates under different rules. The automatic two-month lookback under Part 212 applies only to electronically deposited federal benefits and does not extend to paper checks that are manually deposited.

For debtors who receive both wages and federal benefits, maintaining separate accounts (one for wages and one for federal benefit direct deposits) simplifies the tracing of each exemption and reduces the risk of losing protection due to commingling disputes.

Claiming the Exemption After a Garnishment

The head of household wage exemption is not self-executing. A debtor cannot prevent a garnishment in advance by filing a preemptive declaration of head of household status. The exemption is asserted after a creditor serves a writ of garnishment.

Once the bank freezes the account, the debtor must file a Claim of Exemption and Request for Hearing form with the court within 20 days of receiving the garnishment notice. The claim must include a sworn affidavit establishing head of household status and identifying the funds as exempt earnings. The debtor should attach supporting documentation including recent pay stubs, bank statements showing the direct deposit history, and tax returns or other records confirming dependent support.

The creditor has between eight and fourteen business days to contest the exemption. If the creditor does not object, the court dissolves the garnishment and releases the funds. If the creditor disputes the claim, a hearing is scheduled where the debtor bears the burden of proving qualification as head of household and demonstrating that the frozen funds trace to exempt earnings deposited within the prior six months.

Failing to file the claim of exemption within the statutory deadline can result in a waiver of the exemption, even if the debtor would have qualified. Prompt action after receiving a garnishment notice is essential.

Limitations of the Wage Exemption

The head of household exemption does not protect against all forms of collection. Court-ordered alimony and child support obligations are not subject to the exemption, and a creditor enforcing a support obligation can garnish wages regardless of head of household status. Federal tax debts owed to the IRS are also collectible through a levy on wages, subject to separate exemption amounts under the Internal Revenue Code.

Earnings must be payable in Florida for work performed in Florida to qualify for the exemption. A Florida resident who earns income in another state may find that a creditor garnishes those earnings under the other state’s laws, which may not provide comparable protection.

The exemption also does not apply to previously accumulated savings. Once wages have been in a bank account for more than six months, they lose their exempt character and become non-exempt funds. The broader framework for protecting bank accounts in Florida depends on layering multiple protections rather than relying on any single exemption.