Can they take your savings? How accident judgments are collected

A person who wins a judgment above your coverage can try to collect from your paycheck, your bank accounts and your property, but only through court-supervised steps, and only from assets the law does not protect. Federal law caps ordinary wage garnishment, most states shield some home equity and many retirement funds, and a few categories of money, such as federal benefits, get special protection. What is protected differs sharply from state to state, so the right answer for you depends on where you live.

This is general information, not legal advice. For your own situation, a licensed attorney in your state or the court that issued the judgment is the place to get specifics. The companion article, what happens when damages exceed your liability limits, explains how a judgment above your limits comes about.

From verdict to lien: how a judgment is entered

A judgment is the court's formal order that you owe a specific sum. In a car accident case, it comes from one of four routes: a jury or judge verdict after trial, a default judgment if you do not answer the lawsuit, a judgment entered on an agreed settlement, or an arbitration award confirmed by a court. Ignoring a lawsuit is the most avoidable path. A default judgment can be entered without your side of the story ever being heard, and your insurer cannot defend a case it never learns about, which is why policies require you to send suit papers immediately.

A judgment by itself is a piece of paper. The winner, called the judgment creditor, must still collect, and in most states the court does not do that work. Typical steps are:

1. Record the judgment so that it becomes a lien on real property. In Florida, for example, a judgment becomes a lien on real property in a county when a certified copy is recorded in the county's official records with the creditor's address; if first recorded on or after July 1, 1994, the lien lasts 10 years, and it can be extended for another 10 years by re-recording a certified copy with a new affidavit (Fla. Stat. 55.10).
2. Learn what you own. Many states let a creditor question the debtor under oath about assets, request documents, or serve questions to banks and employers.
3. Use enforcement tools. These include a writ of execution to seize and sell non-exempt property, a garnishment of wages, and a levy on bank accounts.
4. Renew or extend, if needed. Judgments and liens have lifetimes.

How long a judgment lasts

Every state has its own rules, and the lifetime of the lien on real estate can differ from the life of the judgment itself. Florida again shows the structure. Its statute says no judgment is a lien on real or personal property "after the expiration of 20 years from the date of the entry" of the judgment (Fla. Stat. 55.081), the lien on real property cannot be extended past that period, and an action on a judgment of a Florida court of record must be brought within 20 years (Fla. Stat. 95.11(1)). Other states use shorter or longer terms and different renewal procedures. A judgment is not a debt that quietly disappears in a few years, and interest typically accrues on it at a rate the state sets. Your state's court clerk or an attorney can tell you the term and rate.

What a creditor can reach: a quick map

The pattern is simple: federal law protects some categories everywhere, each state layers its own exemptions on top, and anything not protected is available.

Wage garnishment: the federal cap and state variations

For ordinary debts such as a civil judgment, the Consumer Credit Protection Act limits how much of your pay can be taken. The Department of Labor's Wage and Hour Division explains the rule in Fact Sheet 30: the weekly limit is the lesser of 25% of disposable earnings or the amount by which disposable earnings exceed 30 times the federal minimum wage. At the $7.25 federal minimum wage, 30 times the minimum is $217.50 a week. "Disposable earnings" means what is left after legally required deductions such as taxes. Voluntary deductions, such as union dues or health insurance, generally are not subtracted.

Two worked examples with invented paychecks, using the weekly rule:

• Take-home pay of $250 a week. Twenty-five percent is $62.50. The amount above $217.50 is $32.50. The lesser is $32.50, which is the most that can be garnished.
• Take-home pay of $1,000 a week. Twenty-five percent is $250. The amount above $217.50 is $782.50. The lesser is $250, so up to $250 can be garnished that week.

Two other points from the fact sheet matter. Where state law and federal law differ, "the law resulting in the lower amount of earnings being garnished must be observed." And federal law prohibits an employer from firing an employee whose earnings are garnished for any one debt. Support orders, tax debts and certain bankruptcy orders follow different rules and can reach more (15 U.S.C. 1673).

States can be more protective. Florida's head-of-family rule is one example. Under Fla. Stat. 222.11, a person who provides more than half the support for a child or other dependent is a head of family, and disposable earnings of $750 a week or less are exempt from attachment or garnishment. Earnings above $750 can be garnished only if the person agreed in writing to waive the protection, using a separate signed notice, and then only up to the federal limit. Money in a bank account that came from exempt earnings is protected for six months if it can be traced and has not been mixed with other funds. Florida is not typical, though. Some states follow the federal cap, some are stricter, and the details about who counts as a head of family differ.

Bank accounts and protected money

A bank levy freezes what is in the account when the order is served. For many people, this is the first sign of trouble, because it arrives without warning.

Federal rules protect some money. Under Treasury's rule on accounts containing federal benefit payments (31 CFR Part 212), when a bank receives a garnishment order it must review the account for federal benefit deposits, such as Social Security, in the previous two months, and must not freeze the "protected amount." The protected amount is the lesser of the benefit payments deposited during the lookback period or the balance in the account, and the account holder does not have to claim an exemption to reach it (31 CFR 212.3 and 212.6). The rule covers federal benefits only. It does not protect savings that came from your job.

State exemptions for bank accounts vary: some protect a set dollar amount, some protect traced wages, and many protect little. Practical points:

• Keep exempt money separate where you can. Mixing protected and unprotected funds in one account makes it harder to prove what is exempt.
• Respond to every notice. A levy normally comes with a notice and a short window to claim an exemption. Missing the window can forfeit the protection.
• Joint accounts raise ownership questions that vary by state.

The home: homestead protection

Homestead exemptions protect the equity in your primary residence from forced sale to pay certain debts. They range from unlimited protection to modest fixed dollar amounts, and they often have exceptions for mortgages, property taxes and some other debts.

• Florida. The state constitution exempts a homestead from forced sale under process of any court, and says no judgment, decree or execution is a lien on it. The exemption covers up to one-half acre of contiguous land inside a municipality or up to 160 acres outside one, with exceptions for taxes, purchase or improvement obligations, and labor performed on the property (Fla. Const. art. X, s. 4). The protection is not limited by the home's value, which is why Florida is often cited as a very protective state. A lot larger than the acreage limit loses protection for the excess.
• Massachusetts. Chapter 188 defines an automatic homestead exemption of $125,000, and a declared homestead exemption of $1,000,000 created by a written declaration that is executed and recorded (M.G.L. c. 188, s. 1, as shown on the legislature's site in November 2026). Equity above those amounts is not protected from a creditor's reach.

Two homeowners with identical equity can therefore have very different exposure depending on their state. If you rent, the protection is about personal property instead, and your lease and belongings face different rules. See Florida and Massachusetts for those states' overviews, and ask your state's court self-help center or an attorney for yours.

Retirement accounts

Retirement savings get the strongest protection, but the source of the protection depends on the account.

• Employer plans under ERISA. Federal law requires pension plans to provide that benefits "may not be assigned or alienated" (29 U.S.C. 1056(d)(1)). That anti-alienation rule generally keeps a private creditor from reaching money inside a qualifying 401(k) or pension plan. A qualified domestic relations order is an exception for divorce and support, which is different from an ordinary judgment.
• IRAs. These are not covered by that rule, so outside bankruptcy they depend on state law. Florida's statute exempts funds in accounts that meet certain tax-code sections, including IRAs, from the claims of creditors of the owner (Fla. Stat. 222.21). Other states give a cap, a partial exemption, or only what the owner needs for support.
• In bankruptcy. Federal bankruptcy law exempts retirement funds held in tax-qualified accounts and caps the amount for IRAs. The statutory figure is $1,000,000, adjusted for inflation; the adjustment effective April 1, 2025 raised it to $1,711,975 (11 U.S.C. 522). Rollovers from employer plans are excluded from that cap.

Whether you can withdraw from retirement accounts to satisfy a judgment, and the tax cost if you do, is a different question from whether a creditor can force you to. See protecting retirement savings from an auto liability judgment for more on that topic.

Driver's license suspension for an unpaid judgment

Many states link the driving privilege to paying judgments that came out of car crashes. These rules usually sit in the state's financial responsibility law. Florida's illustrate the mechanism:

1. If a person does not satisfy a judgment within 30 days, the judgment creditor or attorney may request that the court clerk forward a certified copy to the state motor vehicle department (Fla. Stat. 324.111).
2. On receiving it, the department "shall forthwith suspend the license and registration" of the person against whom the judgment was rendered (Fla. Stat. 324.121).
3. The suspension continues until every such judgment is stayed or satisfied in full or to the extent of the limits stated in the financial responsibility definition (Florida's is $10,000 per person for bodily injury, $20,000 per accident and $10,000 for property damage), and the person gives proof of financial responsibility, maintained for three years (Fla. Stat. 324.131; 324.021(7)).
4. A court can order installment payments on the judgment, and if the debtor shows proof of financial responsibility and an installment order, the suspension is lifted while payments are kept current (Fla. Stat. 324.141).
5. If the department determines that an insurer was obligated to pay the judgment but did not, through no fault of the debtor, the license is not suspended (Fla. Stat. 324.121(2)(b)).

Other states have their own versions, some with different triggers, amounts and time periods. What the Florida rule shows is how a suspension works in practice: a judgment against an uninsured or underinsured driver can cost the driver the ability to drive until it is addressed, and proof of insurance, often through an SR-22 filing in states that use one, may be needed afterward. The broader framework is described under financial responsibility law.

Bankruptcy and the mistakes that make things worse

What bankruptcy can and cannot do

Bankruptcy is a legal option, not a tactic, and it should be discussed with a bankruptcy attorney. In general terms:

• A judgment from an ordinary negligent crash is usually dischargeable. A court can wipe it out, subject to the bankruptcy rules. That is a major reason why people who cause serious accidents sometimes file.
• Some debts are not. Section 523 of the Bankruptcy Code excepts from discharge debts "for death or personal injury caused by the debtor's operation of a motor vehicle, vessel, or aircraft if such operation was unlawful because the debtor was intoxicated from using alcohol, a drug, or another substance," and debts "for willful and malicious injury by the debtor to another entity or to the property of another entity" (11 U.S.C. 523(a)(9) and (a)(6)). Drunk-driving judgments therefore generally survive bankruptcy, and so can judgments for intentional harm.
• Exemptions determine what you keep. A filer can generally keep property that is exempt under the federal or state list that applies; the rest can be sold to pay creditors.
• Costs are real. Bankruptcy affects credit and insurance rates for years, can require surrendering non-exempt assets, and has eligibility rules.

Also, bankruptcy and license suspension interact in ways that differ by state. Ask an attorney how your state treats an accident judgment that has been discharged.

What not to do

A few well-known mistakes make a bad situation worse:

• Do not ignore papers. Responding on time preserves your defenses and your insurer's duty to defend.
• Do not hide or give away assets after a claim arises. Transferring property to a relative to keep it from a creditor can be undone under state fraudulent-transfer laws, and may create other problems. A lawyer can tell you which planning is legitimate and which is not.
• Do not assume you are "judgment proof." Being poor today does not prevent a creditor from waiting. A judgment can last for many years, and wages, tax refunds and inheritances can be reached later. See the judgment-proof myth: what cheap limits expose after a crash.
• Do not pay one creditor blindly. If you have several debts, the order and method of payment can matter.

Common questions

Can my wages be garnished before there is a judgment?

Ordinarily not. In most states a creditor needs a judgment first. Exceptions, such as certain prejudgment attachments, exist for narrow situations and are controlled by state law.

Will my insurer pay if the judgment is above my limits?

It pays up to the limit, and under typical policies it pays interest on its share and the defense costs. It does not pay the balance unless a court finds it acted in bad faith in refusing a reasonable settlement. See what happens when damages exceed your liability limits.

Can the winner take my car?

A car can be seized and sold under a writ of execution unless the state exempts it, and many states exempt a vehicle only up to a modest dollar value. Check your state's exemption schedule.

Does an umbrella policy prevent all this?

An umbrella adds a layer of liability coverage, so a judgment that would have exceeded your auto limits may fall within the combined limits. It does not cover claims beyond its own limit or excluded losses. See umbrella insurance: liability protection above your auto policy.

How can I find my state's exemptions?

Start with your state court system's self-help center, your state attorney general's consumer pages, or legal aid. The statute names differ: "exemptions," "homestead," "garnishment," and "execution" are the common headings. A licensed attorney can confirm them for your case.

Key takeaways

• A judgment is only the start; the winner must use court-supervised steps to collect, and many assets are protected.
• Federal law caps ordinary wage garnishment at the lesser of 25% of disposable earnings or the excess over 30 times the federal minimum wage ($217.50 a week at $7.25). Some states protect more.
• Homestead, retirement and bank-account protections vary widely: Florida's homestead is unlimited in value, while Massachusetts's is $125,000 automatic and $1,000,000 if declared.
• Unpaid accident judgments can lead to license suspension under state financial responsibility laws, and drunk-driving injury debts are generally not dischargeable in bankruptcy.
• The best protection is adequate liability limits or an umbrella policy, along with answering every lawsuit on time.