Debt Collectors are Emptying Families’ Bank Accounts

February 11, 2026 — Press Release

Weak State Exemption Laws Exacerbate Affordability Crisis, Expand Racial Wealth Gap

WASHINGTON – Low- and middle-income families are in crisis. The rising cost of basic necessities has pushed household debt to historic levels, and lawsuits to collect on unpaid debts have surged. Each new debt collection lawsuit brings another family closer to destitution – with threats of seizure of wages, family homes and vehicles, household goods and appliances, and zero out bank account balances. But state decisionmakers can use a powerful policy tool  to automatically protect a portion of a family’s bank account from seizure by a debt collector, so that no one is made homeless because their bank account has been drained for an old credit card debt.  

A new National Consumer Law Center (NCLC) report, Safe Deposits: How to Protect Family Bank Accounts from Debt Collectors, looks at state exemption laws designed to protect families’ bank accounts from seizure and finds that protections vary greatly from state to state, with some protecting as little as $300 of a family’s hard-earned money, and others providing no protections at all. 

“Seizure of a family’s bank account balance can be devastating for families that are confronted with the harsh reality that the money they’ve set aside for rent, food, utilities, and other basic necessities is gone,” said Carolyn Carter, senior attorney at NCLC. “States should replace what is often a confusing array of complex laws with an automatic, self-executing protection against raiding a family’s bank account.”

The report looks at bank account garnishment, describes how it works, and identifies the role that debt collection lawsuits and seizure of income and property play in perpetuating and widening the racial wealth divide.

Communities of color are disproportionately burdened by debt and have more debt in collections when compared to majority non-Hispanic white communities, and the rate of filing collection lawsuits shows the same pattern. The number of debt collection judgments is also disproportionately higher in majority Black neighborhoods.

Because current laws are complex and many people do not even know they are being sued until their bank accounts are emptied, the report calls for state protections to be self-executing, and applied automatically. While the optimal amount may vary from state to state, the report recommends that state exemption laws automatically protect a simple, flat amount, and preventing banks from freezing or garnishing any amount under $3,000 in an account.

“If the affordability crisis has taught us anything, it’s that many families are one unexpected event away from a financial crisis that can push them into a downward spiral of debt,” said Michael Best, director of state advocacy at NCLC. “Protecting up to $3,000 in a family’s bank account will stop families from being driven into homelessness by an old debt and periodically adjusting the protected amount for inflation will ensure the adequate protection of resources needed for a family’s survival.” 

The report details the laws, rules, and court forms in 13 states (CA, CT, DE, MA, MD, NM, NV, NY, OH, OR, PA, WA, WI) that currently provide self-executing protections for bank accounts, and provides recommendations for state lawmakers and tips for making an automatic protection smooth and efficient. 

Related Resources

• Model Family Property and Income Protection Act, Jan. 23, 2026
• No Fresh Start: Will States Protect Families from Wage and Asset Seizures as Debt Levels Soar? (2025), Dec. 17, 2025
• State Policy Resources: Consumer Debt Collection, Dec. 17, 2025
• What States Can Do to Protect Low-Income Families When Collecting Government Debts, Nov. 21, 2025