Can a creditor garnish a tax refund?

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Can a creditor garnish a tax refund?

I am currently making $50 payments to my hospital. I have never defaulted on a payment and they have always been on time. They want me to pay the full amount of $2000, which if I had the money, I would. They have recently sent my bill to a collection agency. How can they do this and get away with it. I pay all my bills on time. Can they or the collection agency they hired, garnish my tax refund, if I get one?

Asked on November 20, 2010 under Bankruptcy Law, North Dakota

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

When a creditor has voluntarily entered into an agreement with a debtor regarding a re-payment plan, then as long as the debtor is honoring its obligations, the creditor must accept the plan. So as long as you have been payingas agreed, your creditor should not now be able to change the deal and require you to pay sooner or in some other way.

Additionally, a creditor can't take a debtor's tax refund.  It will be sent to the taxpayer; a creditor (other than the government itself) cannot seize or garnish such monies directly.  However, once it is received and deposited into a bank account, then if a creditor has a valid judgement against a debtor, the creditor can garnish such funds (in fact, they can garnish any other non-exempt funds has well).


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