The bank is taking my entire paycheck...

This post is packed with info, so I'm passing it along so we all have it here 😁

Mini Cooper said:The IRS clarified the rules today regarding which funds are protected from garnishment. They specified eight specific scenarios where money is exempt. Essentially, they protect two-thirds of the average net salary in the US; if your income falls below that average, two-thirds of your actual salary is off-limits.
Since January 1st of this year, under the current Bankruptcy Law governing monetary assets, the IRS has been authorized to garnish funds from both businesses and individuals across all bank accounts and term deposits using a person's social security number, without needing their explicit consent.
According to the IRS, the following types of funds are completely exempt from garnishment under the Bankruptcy Law:
- Child support payments,
- Compensation for health issues or loss of work capacity,
- Compensation for lost support due to the death of a provider;
- Disability insurance benefits;
- Social security/welfare benefits;
- Unemployment benefits;
- Child allowances;
- Scholarships and grants for students;
- Wages earned by inmates, except for child support obligations or damages caused by criminal acts;
- Honorariums and awards.
Regarding standard wages, an amount equal to two-thirds of the average net salary in the US is protected. If you earn less than the average, then two-thirds of your specific salary is exempt.
For these purposes, "salary" includes unemployment checks, reduced hours compensation, pay cuts, pensions, military pay, reserve component pay during service, and other regular income for civilians and military personnel.
Note that these exemptions don't apply if the garnishment was issued under specific legal orders that allowed for the seizure of an entire paycheck.
To actually claim these protections—which is intended to preserve a basic living standard—you have to fill out a specific notice form (based on Article 122, Section 1 of the Bankruptcy Law). You can find this at any local IRS field office or on their website www.irs.gov. You’ll need to submit it to an office handling forced collections. A list of branches is available online (including offices in the District of Columbia, San Francisco, 123 Main Street, Indianapolis, 123 Main Street, and Miami, as well as locations in Columbus, Annapolis, Des Moines, Madison, Boise, Savannah, Richmond, Siskiyou, Portland, and the Midwest).
Once that form is processed, the IRS notifies the bank, which will then set up a separate account for those protected funds, and they also notify the payer. This allows the individual to access those specific funds freely.
Clients can direct any questions to the IRS Customer Relations Department via their toll-free number or through their email address:collections@irs.gov.
🙏

Give me a plain-English explanation here. 😁 I’m much more comfortable when there are actual numbers involved. 😁

Take this part:
It states that an amount equal to two-thirds of the average net salary in the US is exempt from garnishment, and if someone's salary is below that average, then two-thirds of their specific salary is protected.

If the average salary in the States is—let's just say—$1.00, then 2/3 would be $0.67.
If someone is making $3.25, can they actually have $2.75 seized?

And regarding this section:
"Salary" includes unemployment benefits, reduced hours compensation, pay cuts, pensions, military pay, reserve component earnings during service, and other regular income for both civilians and military personnel.
So, does that mean they can garnish unemployment benefits too? Provided the total doesn't exceed the 1/3 limit?

Also, what happens once those funds hit a bank account and become—to quote the text—monetary assets held by business entities and citizens across all accounts and time deposits in all banking institutions. Does that imply the entire balance could be subject to seizure?

Two-thirds of 10,000 would be roughly $2222....

It's 2/3 of the average salary in America, not 2/3 of the total paycheck

If someone pulls in $10,000, they'll be left with just $2,000 based on that math—meaning $8,000 gets seized. You nailed the calculation!

Andrew Booth29 said:An authorized overdraft isn't income—it’s just available credit, plain and simple. It’s certainly not an asset, nor is it actual revenue. So, to me, it seems perfectly logical that I can't just bank on that money being there when I need it. Besides, it’s actually pretty smart business for a bank—the moment they catch wind that someone is facing a massive collection action or a lawsuit, they just shut down the line of credit immediately.

Honestly, this debate doesn't carry much weight in the real world. People dealing with legal judgments or collections are usually already maxed out on their overdraft limits anyway. 😬

Lawrence Wright7, I’m sorry you’re dealing with this... I don't really know what to say, but let me give you an example of a family I know who lives off flipping houses they renovate themselves. During this recent downturn, they had zero buyers. They sat on three apartments for two years without a single inquiry. Before that, they barely managed to sell one house to someone from Canada. Just recently, though, they sold two units at once—also to Canadians. One guy showed up, loved the place, and told his buddy he had to take the second one...!!
I'm just saying, maybe try listing your place on some Canadian real estate sites? They seem like the best demographic for this. 😉Your place looks great, and honestly, compared to what else is out there, the price is a steal...

Best of luck!👍

Steven Lee75 said:Lawrence Wright7, I’m sorry you’re dealing with this... I don't really know what to say, but let me give you an example of a family I know who lives off flipping houses they renovate themselves. During this recent downturn, they had zero buyers. They sat on three apartments for two years without a single inquiry. Before that, they barely managed to sell one house to someone from Canada. Just recently, though, they sold two units at once—also to Canadians. One guy showed up, loved the place, and told his buddy he had to take the second one...!!
I'm just saying, maybe try listing your place on some Canadian real estate sites? They seem like the best demographic for this. 😉Your place looks great, and honestly, compared to what else is out there, the price is a steal...

Best of luck!👍

thanks. the price is down to $90,000 now

...plus you've got folks from the Netherlands, the UK, and even some parts of the US who seem to have a thing for San Diego... so honestly, man, just keep browsing... just like I do (old dog, new tricks).

Best-🙂

@Lawrence Wright7
Does that number include the principal? Sorry if you already mentioned this—it’s such a massive topic I might have missed it somewhere in the thread.

Listen...
it covers 😉

It’s a shame you haven't listed this on every single major American classified site yet. You need to be aggressive about it. Get the word out everywhere so the info is impossible to miss. The listing itself is solid—the photos are high quality—but you really need to start posting on international boards for countries that actually care about the US real estate market (like the UK, Germany, Austria, etc.).

Lawrence Cruz said:Give me a plain-English explanation here. 😁 I’m much more comfortable when there are actual numbers involved. 😁

Take this part:
It states that an amount equal to two-thirds of the average net salary in the US is exempt from garnishment, and if someone's salary is below that average, then two-thirds of their specific salary is protected.

If the average salary in the States is—let's just say—$1.00, then 2/3 would be $0.67.
If someone is making $3.25, can they actually have $2.75 seized?

And regarding this section:
"Salary" includes unemployment benefits, reduced hours compensation, pay cuts, pensions, military pay, reserve component earnings during service, and other regular income for both civilians and military personnel.
So, does that mean they can garnish unemployment benefits too? Provided the total doesn't exceed the 1/3 limit?

Also, what happens once those funds hit a bank account and become—to quote the text—monetary assets held by business entities and citizens across all accounts and time deposits in all banking institutions. Does that imply the entire balance could be subject to seizure?

The plan is to set up specialized accounts specifically designed to hold protected income. Only the portion designated for payout will sit in that account, making it accessible for withdrawal. To get that set up, you'll just need to submit a request through the financial authorities.

Jerry Wright6 said:It’s a shame you haven't listed this on every single major American classified site yet. You need to be aggressive about it. Get the word out everywhere so the info is impossible to miss. The listing itself is solid—the photos are high quality—but you really need to start posting on international boards for countries that actually care about the US real estate market (like the UK, Germany, Austria, etc.).

And don't forget to hit those Canadian boards too (maybe some Mexican ones if you're feeling ambitious).

Gerald Chavez7 said:And don't forget to hit those Canadian boards too (maybe some Mexican ones if you're feeling ambitious).

Look, I’ll be honest—I haven't really messed around with classified ads or running campaigns outside of the States.
- Can anyone suggest some decent sites? Free ones, obviously.
shoot me a DM 🙂

Elections are looming, and the vote-counting has already begun...

That’s just how I see it...

I’ve already gone broke 😛

You could fix this mess right now by setting a competitive price, but you refuse. You're just hoping for some miracle to bail you out, but let’s be honest: you're just dragging your feet and making things worse. I've already told you how much time you're wasting per unit of time...
If you declared bankruptcy today, you'd lose everything. They'd liquidate the assets through receivership, and you'd get a "fresh start," but you'd be barred from getting any kind of credit for at least seven years...
The reason you haven't filed for bankruptcy yet is because you've been dutifully paying your bills—up until now. Your situation can continue to spiral indefinitely at your own expense, but look at your life and ask yourself what that actually looks like...
Of course, for most people in your shoes, filing is the smartest move. It forces the banks to swallow the loss, even if they feel the sting of their own poor risk assessment. Their business model isn't exactly foolproof, despite what they think!

Reading this thread honestly makes my stomach turn. Lawrence Wright7, I really hope things work out and you can offload that condo soon. 👍 I’m not sure exactly how much you still owe the bank, but if you could sell it for that amount plus a single dollar, you’d be in the clear. It’s crazy how much money you’ve lost just by sitting on this decision for a year. Times are tough right now and the housing market is sluggish; unfortunately, there isn't much room for haggling when you're the one selling and you're stuck in a spot like this. I guess I sound like a total vulture, but that's just how it is. Good luck again.

I’ve always felt that personal bankruptcy and debt restructuring are actually pretty great tools. I mean, they benefit everyone involved, not just the people drowning in debt. If things worked properly, major banks like JPMorgan Chase would respond by offering serious perks to people who stay on top of their bills—maybe bumping up savings rates or dropping loan interest. Meanwhile, they could "penalize" the folks who default by just cutting off access to new credit. Right now, though, it feels like everyone gets treated the same because, at the end of the day, the banks know they can squeeze money out of anyone eventually.

analogwolf60 said:I’ve always felt that personal bankruptcy and debt restructuring are actually pretty great tools. I mean, they benefit everyone involved, not just the people drowning in debt. If things worked properly, major banks like JPMorgan Chase would respond by offering serious perks to people who stay on top of their bills—maybe bumping up savings rates or dropping loan interest. Meanwhile, they could "penalize" the folks who default by just cutting off access to new credit. Right now, though, it feels like everyone gets treated the same because, at the end of the day, the banks know they can squeeze money out of anyone eventually.

Banks have actually been rewarding their best clients for quite a while now through better savings yields and more competitive loan rates.

People with shaky repayment histories or massive debt loads don't find it easy to secure financing. Between the implementation of the Federal Reserve guidelines and tools like HubSpot, the playing field isn't level anymore—not everyone gets the same treatment.