What Money is Protected From Creditors?
When an account goes into collections, there are state and federal laws in place to help protect both creditors and borrowers, and a better understanding of these laws can help you better protect your bottom line. If you’re facing a concern related to debt collections, reach out for the skilled legal guidance of an experienced Arkansas business and banking attorney.
Financial Protections in Arkansas
Arkansas has laws in place that protect debtors’ assets up to very limited amounts.
The Debtor’s Home
Under the homestead exemption law in the State of Arkansas, a debtor’s properties are protected for up to $2,500 in value or for up to $5,000 in value for a married couple. This refers to the maximum amount of a debtor’s property that can’t be subjected to a judicial decision in response to creditors’ claims.
The Debtor’s Vehicle
Equity in a creditor’s vehicle in Arkansas is protected up to $1,200.
The Debtor’s Accounts
A debtor’s bank accounts are exempt from debt collection up to $800 for a single person and up to $1,250 for a married couple. When there is a court order to access an account, anything that exceeds this amount is subject to the collection process. This law applies to any bank account that has the debtor’s name attached – even when it’s a joint account.
The Debtor’s Wages
Protections regarding debtor’s wages are more robust. Wages can only be garnished – or deducted directly from a debtor’s paycheck rather than from their bank account – after a 75 percent exemption has been established. This 75 percent applies after all necessary deductions, including the following, have been taken:
- Federal, state, and local taxes
- Social security tax
- Unemployment tax
- Disability tax
At this juncture, 75 percent of the debtor’s wages are exempt, and only the remaining 25 percent can be deducted in the form of a garnishment. It’s also important to note that when an employee takes home less than a specific amount each week, wages can’t be withheld.
An Experienced Arkansas Business and Banking Attorney Can Help
At Brown Dunning Walker Fein Drusch PC, our seasoned Arkansas business and banking lawyers dedicate their practice to helping our valued clients resolve their debt concerns with their financial rights intact. Learn more by contacting us online or calling 501-588-4460 and scheduling an appointment today.