Can Wages Be Garnished Through a Prepaid Credit Card?

When a person has debts that are outstanding and delinquent with a creditor, he always runs the risk that he will become the target of a lawsuit seeking collection of these debts. In such a case, the person, if found guilty of owing the money, may become the object of more aggressive attempts to collect the money that he owes. This can include wage garnishment. However, garnishing a prepaid credit card would be difficult.

Garnishment is the diversion of a debtor's income stream to the creditor to whom he owes money. Garnishments are not generally applied with the debtor's permission but are placed at the request of a creditor. Garnishments must be applied to a source of income for the debtor, such as a paycheck, not to an asset or a bank account.

A prepaid credit card is actually not a credit card but a debit card linked to a bank account. However, unlike a regular debit card that is linked to its holder's checking account, a prepaid credit card is linked to a special account to which the card's owner cannot deposit money, only withdraw it. Often, these credit cards will be given to individuals by retailers or other companies as a refund or gift card.

It would be difficult for a creditor to garnish a prepaid credit card. This is because garnishments require that the creditor present the garnishment order to the person providing the debtor with income. Unless the creditor were able to anticipate the presentation of a prepaid creditor card to a debtor, he would not be able to serve the order on the card giver.

A prepaid credit card is linked to an account from which a person can withdraw money to make purchases. While a creditor cannot garnish a person's bank account, it can freeze it and divert money from it, with a judge's orders. Theoretically, if the account had enough money in it, the creditor could apply to have the prepaid credit card account seized.