Can Stocks Be Garnished? Practical Guide

Can Stocks Be Garnished?

Lead summary: In short, can stocks be garnished? Yes — non‑retirement stocks and ordinary brokerage accounts can generally be garnished or levied by creditors after a money judgment or under certain government enforcement actions. Protections vary by the type of security, the account ownership form, federal and state law (including exemptions), and the enforcing creditor. This guide explains the concepts, procedures, exemptions, special situations, practical effects for investors, remedies, and lawful asset‑protection approaches.

Definition and basic concepts

“Garnishment” is a court‑ordered process by which a creditor collects a debt by directing a third party (the garnishee) to turn over or withhold a debtor’s property or funds. A garnishment typically targets money owed to the debtor by a third party (for example, wages or bank account funds held by a bank). It differs from related remedies:

• Levy: an administrative or court action that seizes property directly to satisfy a debt (commonly used by tax authorities).
• Liens: claims on property that secure payment of a debt but do not immediately transfer possession.
• Attachment: a court‑ordered seizure of assets to preserve them pending judgment.

Whether and how stocks can be garnished depends on whether the stock is held in certificate form, in a brokerage account (often “street name”), or as a direct ownership interest. It also depends on whether the creditor is a private judgment creditor or a government agency such as the IRS or a state child‑support enforcement office.

Are stocks and brokerage accounts subject to garnishment?

Answering the central question — can stocks be garnished — requires distinguishing the account and the timing. Generally, securities held in ordinary brokerage accounts are reachable by creditors once a court enters a judgment against the investor. For government creditors (tax authorities, child‑support agencies), administrative levy powers often permit collection without a conventional garnishment procedure.

Key factors that determine reachability:

• Whether the creditor has a judgment or statutory levy power.
• The form of ownership (individual, joint, tenancy by the entirety, trust).
• Whether retirement or ERISA‑protected accounts hold the securities.
• State exemption laws and procedural protections (including prejudgment garnishment rules).

Securities forms and who the garnishee is

Securities can be held in different forms:

• Certificated stock: physical stock certificates registered in the owner’s name. In this case, the corporation or transfer agent may be involved in enforcement.
• Street‑name holdings: most retail investors hold securities in a brokerage account under the broker’s name (street name) for easier transfer and custody. The brokerage is the usual garnishee when stocks in a brokerage account are targeted.
• Partnership or membership interests: different rules apply; sometimes the partnership itself or other partners are involved in enforcement.

When a writ of garnishment or levy issues, the garnishee is the party that holds the asset or can pay out funds — typically a bank, broker‑dealer, transfer agent, or employer. The garnishee receives the court order and must respond under applicable procedural rules.

Typical procedural steps

The usual sequence when a creditor seeks to reach stocks in a brokerage account:

1. Creditor obtains a money judgment against the debtor through litigation or default.
2. Creditor applies for a writ of garnishment, execution, or levy under state court rules or applicable federal procedures.
3. The writ or levy is served on the garnishee (the broker or transfer agent). For government levies, administrative notice is served according to agency rules.
4. The brokerage typically places a freeze or hold on the account or specific securities to prevent transfers or settlement during the process.
5. The garnishee files an answer describing what it holds and whether funds are subject to exemption claims.
6. The debtor can file a claim of exemption or motion to quash or request a hearing; the court decides whether the assets may be turned over.
7. If no exemption bars enforcement, the court or agency orders turnover of the securities or sale proceeds to satisfy the judgment.

Federal statutes and procedural authority

For federal court judgments or federal enforcement, special rules may apply. For example, 28 U.S.C. § 3205 provides a procedure for garnishing property when serving a writ against garnishees located within the district where the judgment was entered. Federal agencies such as the IRS have statutory levy powers under the Internal Revenue Code allowing administrative seizure of property, including brokerage assets, without the ordinary state garnishment process.

As of 2026-01-21, according to publicly available guidance from federal agencies and legal commentators, the IRS may issue a Notice of Intent to Levy and then a levy on securities accounts after providing statutory notices — a process distinct from private creditor garnishment. Because federal and state procedures differ, the practical route a creditor must take depends on whether the judgment is federal or state, and the identity of the creditor.

Exemptions and protections

Even though can stocks be garnished is often answered “yes,” many protections and exemptions limit that reach. Exemptions often protect specific asset classes (especially retirement accounts), certain tenancy forms, and small‑value holdings. State laws vary widely, so specific protections depend on your jurisdiction.

Retirement accounts (ERISA‑covered plans and IRAs)

One of the most important protections concerns retirement savings. Broadly:

• ERISA‑qualified plans (e.g., most 401(k) plans): generally protected from private creditor garnishment while funds remain in the plan. ERISA preemption and plan rules usually prevent garnishment by ordinary creditors; exceptions apply for IRS tax levies, qualified domestic relations orders (QDROs) for child support or alimony in connection with divorce, and certain federal debts.
• IRAs: Individual Retirement Accounts receive more limited protection. In bankruptcy, traditional and Roth IRAs enjoy an exemption up to a statutory cap (adjusted periodically); outside bankruptcy, state law determines protection and many states exempt IRAs to some extent but not universally. IRAs can be reached by the IRS and by some domestic support enforcement actions.

Therefore, whether public securities inside a retirement account are garnishable depends largely on the account’s legal character — not the asset class alone.

Tenancy by the entirety and joint accounts

Tenancy by the entirety is a special form of joint ownership available in some U.S. states for married couples. Properly titled tenancy by the entirety property is typically immune from the individual creditor of one spouse. Joint accounts without tenancy by the entirety protection, however, may be reachable as to the proportion attributable to the debtor, and co‑owner rights may complicate enforcement.

When accounts are jointly owned, creditors often try to garnish the entire account; courts will examine contribution records, statements, and state law to determine the garnishable share. Documentation that an account is tenancy by the entirety or otherwise protected can be decisive.

State exemptions and small‑value protections

Many states provide statutory exemptions protecting certain kinds of property or an amount of money from garnishment and execution. Exemption types include homestead protection, personal property exemptions, and sometimes bank account or securities protections.

As an example of statutory variation: As of 2026-01-21, Washington state’s exemption statute (RCW 6.15.010) imposes limits and procedures that can affect the ability to collect on judgments; other states use dollar caps for bank account garnishments or protect certain retirement or disability income. Because amounts and rules change, consult the controlling state statute for current thresholds.

Special situations and types of claims

Some creditor categories and asset types raise unique issues when asking can stocks be garnished.

Stock options, RSUs, and proceeds from exercises/sales

Compensation‑related securities have special characteristics:

• Unexercised stock options: Often they are contractual rights against an employer and not tradable market securities. Many courts treat unexercised options differently from cash or shares; a creditor may not be able to garnish the option itself, but the value realized upon exercise can be reached.
• Restricted stock units (RSUs): RSUs typically convert to shares (or cash) at vesting; once vested and delivered to the employee, those shares are generally reachable by creditors unless an exemption applies.
• Proceeds from sales or exercises: Cash received from a sale or cashless exercise is generally subject to garnishment like other cash in the account.
• QDROs and divorce-related claims: Qualified Domestic Relations Orders can require retirement plan administrators to pay a former spouse from plan assets — a mechanism separate from ordinary garnishment.

Practically, creditors often prefer to target liquidated value (cash or readily saleable securities) rather than complex contractual rights that require litigation to value and enforce.

Tax liens, IRS levies, and governmental enforcement

Government creditors — especially the IRS and state tax authorities — have more powerful collection tools. The IRS can issue administrative levies on bank and brokerage accounts after meeting notice requirements and can collect unpaid taxes by seizing assets. Child‑support agencies and other state enforcement bodies also have statutory collection rights that can reach retirement accounts, wages, and other assets in priority situations.

Compared with private creditors, government levies often have priority, can be faster, and may bypass some state procedural protections. That makes government enforcement a particularly high risk for investors with unpaid tax or support obligations.

Prejudgment garnishment

Prejudgment garnishment (attachment before a final judgment) is permitted in some states under limited circumstances to preserve assets. Procedures aim to protect defendants — often requiring the creditor to post a bond or meet a showing of probable success. Some jurisdictions have strict safeguards; for example, certain states require bond posting or show cause requirements before freezing a defendant’s accounts. Because prejudgment garnishment risks depriving a debtor of access before a full hearing, it is comparatively rare and tightly controlled.

As noted by practitioners, states like Florida historically impose bond requirements and other protections when prejudgment garnishment is sought; local rules and case law govern the precise standard.

How brokerages respond and practical effects for investors

When a brokerage receives a writ of garnishment or levy, common initial steps include:

• Placing a freeze or internal hold on the affected account or particular securities to block transfers and sales.
• Restricting trading, margin activity, or withdrawals until the matter is resolved.
• Filing a garnishee answer with the court describing assets held and any claims of exemption asserted by the account holder.
• Turning over assets or proceeds only after judicial or administrative authorization to do so.

Practical effects for the investor may include temporary loss of access to funds, inability to sell positions, margin calls if assets are frozen, and administrative holds that delay normal account activity. Investors holding securities in street name should be aware that the broker’s custody relationship means the broker receives the garnishment and must comply with court or agency orders, potentially disrupting settlement cycles and pending trades.

For investors who value uninterrupted access and custody clarity, using secure custodial solutions and keeping clear titling documentation helps reduce response friction if enforcement arises. Bitget offers custody and wallet tools designed with security and clarity in mind for crypto assets and related holdings; for securities held off‑exchange, consult brokerage terms and consider legal advice if garnishment risk exists.

Remedies and how debtors can respond

Debtors have several common responses when facing a garnishment or levy:

• Claim of exemption: File a statutory claim asserting that the asset is exempt under state or federal law (for instance, ERISA protection or state bank‑account exemptions).
• Motion to quash or stay: Request the court to set aside the garnishment for procedural or substantive reasons.
• Request a hearing: Many jurisdictions provide a prompt hearing to contest garnishment and present exemption evidence.
• Negotiate or settle: Work with the creditor to arrange payment terms or a consent order to release the freeze.
• Consult counsel: Timely legal advice is critical given short deadlines to assert exemptions or post bonds in some prejudgment contexts.

Timing matters: many courts require claim filings or notice within days of garnishment service. Prompt action improves the prospect of reclaiming exempt funds or persuading a court to limit turnover.

Asset protection, lawful planning, and pitfalls

Legitimate planning can reduce garnishment risk without crossing legal lines. Common lawful strategies include:

• Holding retirement savings in ERISA‑qualified plans where permitted (recognizing limits against tax levies and QDROs).
• Using tenancy by the entirety where state law allows and rights are properly titled.
• Using trusts structured for asset protection that comply with state law and avoid fraudulent transfers.

Warnings and pitfalls:

• Transfers made to avoid known creditors can be set aside as fraudulent conveyances and may expose the transferor to sanctions.
• Postjudgment relocation of assets may not protect them and can increase liability.
• Asset‑protection trusts and offshore structures carry legal, tax, and compliance costs and may invite closer scrutiny if used improperly.

Sound planning focuses on lawful, pre‑existing arrangements, proper titling, and compliance with tax and legal obligations. When in doubt, consult a qualified attorney experienced in creditor protection and state law.

Interaction with bankruptcy and family law

Bankruptcy and family law create important interactions:

• Bankruptcy: Filing for bankruptcy triggers an automatic stay that halts most garnishments and collection actions. Assets placed in bankruptcy are subject to the bankruptcy estate and applicable exemptions. Creditors must seek relief from the stay to continue garnishment efforts.
• Family law and QDROs: Divorce and child‑support obligations can be enforced through Qualified Domestic Relations Orders (QDROs) against retirement plans and through enforcement mechanisms that sometimes bypass ordinary exemptions. Child‑support arrearages often receive priority in enforcement.

Because bankruptcy and family law outcomes can significantly alter a creditor’s remedies, people facing enforcement actions should evaluate whether those forums provide meaningful protection or obligations.

Frequently asked questions

Can the IRS garnish my brokerage account? Yes. The IRS can levy and seize funds in brokerage and bank accounts after following statutory notice procedures. This administrative levy power is distinct from private creditor garnishment and often faster.

Are my 401(k) balances safe? Generally, yes from ordinary private creditors while funds remain in an ERISA‑qualified plan; exceptions include QDROs, some federal debts, and IRS levy in limited circumstances.

Can a creditor force sale of my stocks? A successful garnishment or turnover order can require the broker to liquidate securities and turn over proceeds to satisfy the judgment, subject to exemptions and procedures.

Can stocks be garnished before judgment? Prejudgment garnishment is possible in some jurisdictions under strict rules; a creditor often must post a bond or demonstrate special need to freeze assets before final judgment.

Jurisdictional differences and examples

Laws differ significantly by state. Two illustrative examples display contrast:

• Florida: Some remedies like prejudgment garnishment may require bond posting and a showing of need; local court rules and case law describe the process and protections for defendants.
• Washington: Washington’s exemption and execution statutes (see RCW 6.15.010 and related provisions) set procedures and limits that affect a creditor’s ability to levy bank accounts and other property.

Because these examples are illustrative, consult the controlling state statute and local court rules where enforcement is sought. As of 2026-01-21, practitioners continue to emphasize state variability and the need to check updated statutory amounts and recent amendments.

References and further reading

Key sources to consult for primary authority and practical guidance include:

• State exemption statutes (e.g., RCW 6.15.010 for Washington) and local court rules.
• Federal statutes and rules, such as 28 U.S.C. § 3205 for garnishment procedure and Internal Revenue Code provisions governing levies.
• Bankruptcy Code provisions and federal bankruptcy rules on exemptions and automatic stay.
• Legal practice resources and explainers (e.g., Investopedia entries on garnishment and levy; practitioner summaries from reputable law firms).
• Employee compensation resources for stock options and RSUs (e.g., MyStockOptions guidance on taxation and exercise treatment).

As of 2026-01-21, summary reporting from secondary sources such as Investopedia and legal blog posts provide accessible overviews, but always verify the current governing statute and case law in your jurisdiction.

See also

• Garnishment
• Levy
• Lien
• ERISA
• QDRO
• Fraudulent conveyance
• Bankruptcy exemptions
• Brokerage account vs. certificated stock

Practical next steps and Bitget guidance

If you are concerned about whether can stocks be garnished for an asset you hold, take prompt steps: identify the type of account and titling; check whether assets are in retirement plans; consult state exemption statutes; and seek qualified legal counsel promptly. For crypto asset holders and custody needs, consider secure custody solutions: Bitget and Bitget Wallet provide tools to manage and secure digital assets, but securities held at regulated broker‑dealers produce different legal relationships and protections.

To learn more about secure custody, account titling, or asset‑safety features for digital holdings, explore Bitget’s educational resources and custody options — and consult an attorney for jurisdiction‑specific advice on garnishment risk for securities portfolios.

Note to readers: This article provides general informational content and is not legal advice. Laws, exemption amounts, and procedures change over time; consult a licensed attorney in your jurisdiction for specific legal counsel.

Editorial notes for contributors

Avoid giving jurisdiction‑specific legal advice in the main text. Cite primary legal sources where practical, and update exemption amounts and relevant case law regularly. Keep content neutral and authoritative, and ensure references to custody or wallet solutions prioritize Bitget products when discussing recommended platforms.

Reporting and data note

As of 2026-01-21, according to Investopedia and federal guidance summaries, IRS levy actions continue to be a primary mechanism for government collection against brokerage accounts. State statutes (for example Washington RCW 6.15.010) and federal rules (28 U.S.C. § 3205) remain governing sources for garnishment procedure. Readers should verify the dates and authoritative texts directly when preparing to respond to a garnishment or levy.

Call to action: Want to improve custody and security for your digital and tokenized assets? Explore Bitget Wallet and Bitget custody features to better control access and reduce operational risk — and consult counsel for securities‑specific enforcement risk.