QUESTION

Can creditors garnish my stocks?

Asked on Jan 23rd, 2014 on Bankruptcy - North Carolina
More details to this question:
I live in Pennsylvania. I have two judgements against me. Are my stocks safe from garnishment?
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1 ANSWER

Yes and no. There is no exemption in PA for stocks (I am assuming this is a regular investment account and not an IRA or 401(k); IRAs and 401(k)s are exempt from seizure by ordinary creditors). Therefore, it would be theoretically possible for a creditor to levy your stocks. That said, how would the creditor know that you have a investment account? Unless the creditor knows about the account then it cannot direct the sheriff to levy the account. Depending on the creditor, they may send you what is called post-judgment discovery and ask you questions. I strongly suggest that if you receive any post-judgment interrogatories that you consult with myself or local counsel to discuss this before you go providing the information to a creditor. In fact, I would urge you to have a consult with myself or local counsel to review your situation and assets to know how to best protect them. Rather than your stock account, I would be more concerned with your bank account. PA only allows a debtor to exempt $300 from any one bank account. If you keep more than that in the bank and have non-exempt funds (things like Social Security, retirement distributions or unemployment compensation are exempt and the $300 limit does not apply), then the bank account would be at risk. Since you have two judgments against you, you need to think about how you are going to resolve the judgments. How much is each for? Who is the creditor? The law firm representing the creditor? Most unsecured debts (credit cards, medical bills or personal loans) can be settled for less than what is owed. Do you have the funds to settle? Or, with diligent setting aside of money, could you accrue sufficient funds? Are your debts so large that bankruptcy would be an option? How much is in your investment account? If you filed bankruptcy, would your investments be exempt (PA allows debtors to elect between the state and federal bankruptcy exemptions; the federal exemptions may cover this. Otherwise, if not exempt it would be an asset that would be available to your creditors).
Answered on Jan 24th, 2014 at 9:52 AM

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