Can There Be a Lean on Your Bank Account Without You Knowing?

Tin can a Bank Account Be Garnished?

In nearly cases, a banking company account tin be garnished past a judgment creditor to collect on its monetary judgment. People with judgments therefore often want to know how to open up a bank account that no creditor can touch. Despite the judgment, the debtors need a banking company to secure their savings and hereafter income. Yet, they exercise not want to put their coin in a bank account only to lose it to garnishment or banking company account levy.

There are four means to open up a bank business relationship that is protected from creditors: (1) using an exempt banking company business relationship, (2) using country laws that don't allow bank account garnishments, (3) opening an offshore bank account, and (4) maintaining an account with only exempt funds.

Showtime, exempt bank accounts include accounts owed every bit tenants by entireties (if the debt is just owed by one spouse). 2d, some states have laws that prohibit a judgment creditor from garnishing banks within the state entirely, regardless of the source of the funds in the account. Third, an offshore bank account can make collection by almost civil creditors very challenging and expensive. And 4th, an account would exist protected that includes merely exempt funds, such every bit social security deposits.

Quick Summary

• At that place are ii primary ways to open up a bank business relationship that no creditor tin bear on: using exempt funds and opening an account in a land that prohibits bank account garnishments.
• Information technology is very difficult to hibernate a bank business relationship from creditors—they tin find out where you bank in post-judgment discovery.
• Protecting coin in a banking company business relationship is non as unproblematic as giving it away or changing the owner of the business relationship.

Opening a Banking concern Account That No Creditor Tin Touch

In that location are iv means to open a bank business relationship that no creditor can bear upon:

1. Open an Exempt Bank Account

Some bank accounts may be exempt from garnishment under applicable land laws. For example, in Florida and some other states, bank accounts endemic jointly by married couples as tenants by entireties are exempt from garnishment past a judgment creditor of either spouse. The accounts are not exempt from creditors of both spouses, notwithstanding. Tenants past entireties ownership of depository financial institution accounts is governed past 655.79 of the Florida Statutes.

A debtor does not have to reside in Florida to maintain an exempt entireties account at a Florida banking concern. Florida constabulary exempts entireties accounts in the state regardless of where the possessor resides. Beware that there are several legal, technical requirements to open an exempt entireties account at many banks that do not offer an entireties option on the account application. It's best to find a local Florida bank that expressly provides tenants past entireties accounts and where the entireties designation is expressed on the signature card and monthly statements.

Empathize that if a creditor serves a writ of garnishment on a bank where the debtor maintains an exempt tenants by entireties account, the bank will still freeze the account. The debtor will have to hire an attorney to claim the exemption in a court proceeding and take the court order the garnishment dissolved. A banking concern may not exist held liable for retaining money in a garnished account during the time the debtor is attempting to dissolve a garnishment writ through court proceedings.

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ii. Open up a Depository financial institution Account in a Country Whose Laws Prohibit Garnishments

A judgment debtor can best protect a depository financial institution account past using a banking company in a state that prohibits garnishment against banks. In that example, the debtor's money cannot exist tied up by a garnishment writ while the debtor litigates exemptions.

If a land's laws do non allow creditor garnishment of bank accounts, the debtor can always maintain protected greenbacks to pay living expenses and legal bills. The best scenario is where the debtor does not take to reside in the state with protected banking company garnishment laws. Such a case allows any debtor to open an account in the protected bank regardless of residency and where the judgment was entered.

Some states, such every bit Due south Carolina, Maryland, North Dakota, New York, and New Hampshire, protect a small amount of money in a bank account from judgment creditors. A few states completely prohibit creditor garnishments of banking company accounts no matter the corporeality of money in the account. However, most (but not all) banks in these states accept but customers that live in the state where the bank is located.

3. Open an Offshore Bank Account

An offshore bank account is a banking company business relationship located outside the Us. While non technically an exempt account, in practice it is very difficult for a judgment creditor to accomplish funds sitting in an offshore depository financial institution business relationship.

For example, in Florida, a courtroom must have jurisdiction over the offshore depository financial institution and over the funds themselves in order to issue a garnishment directed towards the offshore bank. Additionally, there is example law suggesting that a country court cannot compel a judgment debtor in Florida to bring assets located outside of Florida to the state (called a "turnover" order).

four. Open a Wage or Government Benefit Account

Some states, such as Florida, exempt the garnishment of wages of the caput of the family. In addition, about federal benefits, such as social security or inability payments, are exempt from garnishment.

Protection of these funds remains when they are deposited into a depository financial institution account, but only if the judgment debtor can trace the funds to their exempt source. Tracing is easiest when a banking company business relationship contains only funds from the exempt source. In other words, do not mix exempt and non-exempt funds in the same bank account.

Tip: Effort to overlap your protection by putting exempt funds in a bank account that is immune to garnishment nether state law.

Understanding a Banking concern Levy

A bank levy is a legal tool to seize funds held in a banking concern by a judgment debtor. In many states, a banking company levy is called a garnishment. A bank levy is, in fact, only one type of garnishment. Garnishments, in full general, are the legal procedure a judgment creditor tin can use to intercept debts a third party owes to the debtor. Banks and other financial institutions are indebted to the customer for the amounts the institutions hold in the debtor's accounts. State statutes provide procedures for a judgment creditor to obtain a writ of garnishment against the judgment debtor'due south financial assets. Bank accounts, coin market accounts, safe deposit boxes, promissory notes, and other financial accounts are all bailiwick to creditor garnishment writs.

Mostly, a judgment creditor cannot levy or garnish a banking company account until the creditor has filed its lawsuit, served the debtor with process, and obtained a judgment. On the other mitt, federal agencies have essentially more than power to seize a debtor's assets fifty-fifty earlier a lawsuit has been completed.

To protect a banking company account from creditors, one must sympathize the legal tools a judgment creditor tin use to freeze and take the money in your bank account. In Florida and near other states, the judgment creditor'south legal tool to seize bank accounts is the writ of garnishment.

Upon a banking company or stockbroker's receipt of a writ of garnishment, the banking company or stockbroker is required to freeze all accounts where the judgment debtor is owner or co-owner without find. A debtor may then notice himself with no bachelor coin to pay living expenses or pay his attorneys.

The levied depository financial institution has a time catamenia provided by law to file with the applicative court a response stating what accounts the debtor owns and how much money the garnished banking company held in each account on the day the garnishment was served. The debtor then has the opportunity to assert a merits of exemption from garnishment for any of several grounds offered past state law.

Most debtors maintain meaning amounts of money in bank accounts or money marketplace accounts at financial institutions. Bank accounts are an attractive drove target for creditors for several reasons:

• They contain liquid assets that immediately tin pay the creditor and his attorney.
• Every debtor needs his bank account money to pay his living expenses and attorney fees, and therefore, attacking the debtor's liquid accounts exerts financial stress on the debtor.
• Obtaining a writ of garnishment against a depository financial institution business relationship is a relatively elementary legal procedure.

Banking company Levy vs. Garnishment

A depository financial institution account levy is the legal tool in some states where a judgment creditor seizes a bank account to collect on its judgment. In these states, the law differentiates betwixt a garnishment (used for wages) and a banking concern account levy (used for coin the judgment debtor has in a banking concern account).

To obtain a bank account levy, a creditor first must petition or move a Court to enter an order freezing the bank account. Once the court enters the order, the creditor can serve the society onto the depository financial institution. The banking company will comply with the order and allow the creditor to fully withdraw all funds from the business relationship to satisfy the judgment.

In Florida, banking company business relationship levies are called garnishments. Further, Florida constabulary only allows the temporary freezing of the account, allowing the judgment debtor to claim whatever exemptions earlier the funds ultimately go to the judgment creditor.

Under Federal collection law, government agencies can levy bank accounts to satisfy government debt such equally sanctions, fines, or restitution orders.

Learn More

Read our complete guide to Florida nugget protection police force.

Bank Business relationship Garnishment in Florida

In Florida, bank account garnishment is authorized by Chapter 77 of the Florida Statutes. Specifically, nether section 77.03, a judgment creditor can request that a court event a writ of garnishment. Once issued, the creditor serves the banking company with the garnishment. Nether section 77.06 of Florida law, the bank must freeze all accounts belonging to the debtor, whether the accounts are individual or articulation.

Information technology is not up to the bank to determine whether the judgment debtor has whatsoever applicable exemptions to garnishment. Instead, Florida bank account garnishment procedures burden the judgment debtor to claim any applicable exemptions.

Florida debtors can protect their banking company accounts from garnishment by taking advantage of the land's exemptions and garnishment procedures. Florida police force exempts from creditor collection coin from specific sources such every bit social security, retirement withdrawals, and annuity distributions. Florida courts have consistently held that money from an exempt asset retains its exemption after the exempt coin is deposited in the debtor's banking concern accounts.

There are also procedural defenses to garnishment. Florida garnishment statutes impose upon creditors many procedural requirements and time deadlines. The garnishment rules are strictly enforced. A garnishment that deviates in whatsoever mode from the statute'due south garnishment rules should be dissolved and the funds released.

The garnishment statutes set out procedures for garnished debtors to affirm a claim of exemption or other legal defenses to the garnishment. The debtor is required to challenge the garnishment in a court proceeding and obtain a court gild to release garnished money. All the debtor's garnished funds remain frozen during the time the debtor is challenging the garnishment in court.

A bank may not be held liable for retaining money in a garnished account during the fourth dimension the debtor is pursuing a defense through courtroom proceedings. Nevertheless, in that location is an exception for social security gain: a garnished bank is required to release immediately from garnishment all money traceable to the debtor'southward social security payments.

Important: A judgment creditor can yet endeavour to garnish a depository financial institution account even if it only contains exempt funds.

Judgment debtors sometimes want to know how to hibernate money from creditors. But hiding a banking company account from creditors is never an constructive asset protection strategy.

Judgment creditors tin detect where a debtor maintains bank accounts by using postal service-judgment discovery, or discovery in help of execution. Post-judgment discovery refers to the creditor collection tools that allow a creditor to detect out where the debtor holds assets that are available to satisfy a judgment. A creditor has several methods of forcing a debtor to answer questions under oath about the debtor'due south financial accounts, cash on hand, and whatever other source of coin that the debtor has bachelor. These methods prevent a debtor from effectively hiding a bank business relationship from creditors, other than lying under adjuration. Some creditor discovery tools include:

• oral degradation of the debtor nether oath
• written interrogatories (a list of questions the debtor must respond under oath)
• requests to produce bookkeeping statements and other financial documents
• Florida'southward standard fact information canvas (a fiscal statement)
• examination of the debtor'south federal tax returns that show bank interest income

Using a combination of these discovery methods, a creditor may identify all of a debtor's fiscal accounts wherever located or identify whatever person or company owning fiscal accounts on the debtor's behalf.

If a debtor answers questions untruthfully or provides misleading or incomplete answers, the debtor may be held liable for contempt of court and criminal perjury. Not but practice simulated and misleading descriptions under oath expose the debtor to unnecessary civil sanctions or criminal liability, but evasive answers will besides undermine the debtor's credibility in subsequent court proceedings.

Proper asset protection planning does not involve hiding assets from creditors. Instead, judgment debtors tin have reward of statutory exemptions and inherent limitations of land garnishment laws to protect their banking concern deposits even later on disclosure.

Example Use of a Protected Depository financial institution Account

James is an unmarried Florida resident with an onetime judgment for an unpaid credit card beak many years ago. The creditor has not tried to collect on its judgment for many years, then James has built up a decent corporeality of savings in his banking concern account.

Recently the creditor has scheduled a deposition in aid of execution, and then James is worried that the bank will discover out where he banks and take his savings. Because he'due south not married, he has not taken reward of tenants past entireties constabulary to protect the bank account. There are no other exemptions to the coin in the account.

In this situation, James may be able to protect the funds by depositing them at a depository financial institution immune from garnishment under state law. The creditor's drove tool, should it discover where James keeps his money, is a garnishment. But if the funds are at a bank that the creditor cannot garnish, the money effectively would exist protected from the judgment creditor.

Offshore Depository financial institution Account Protection

Many attorneys propose clients to protect banking concern accounts from creditors and garnishments past opening offshore banking company accounts that are not bailiwick to U.S. garnishment statutes and writs.

Nevertheless, U.South. citizens can non easily open offshore accounts in their individual names considering of international anti-terrorism rules. Offshore bank accounts can typically but be established through newly formed asset protection entities such equally offshore trusts or offshore limited liability companies ready up through attorneys.

These offshore arrangements sometimes have disadvantages. Forming offshore entities and offshore cyberbanking is complicated and expensive, and the debtor must relinquish control over these entities and their bank accounts to offshore trustees and managers to be constructive asset protection. Transfers of funds to offshore entities are subject to attack as fraudulent conveyances under the fraudulent transfer statutes.

In sure circumstances, it may sense for a judgment debtor to use an offshore bank business relationship every bit role of an overall asset protection plan. Furthermore, some offshore banks take recently allowed U.S. individuals to open up an account individually without forming an offshore LLC or offshore trust.

Book a Consulation

Learn which of your assets are at risk and how to protect them. We assistance people throughout Florida by phone or Zoom.

Business Banking concern Accounts and Garnishment

Using a business banking company account tin can exist an effective style for an private judgment debtor to avert a banking company account garnishment. A person who owns a business tin choose to continue more than funds in their concern rather than distributing the funds to themselves.

If the judgment holder only has a judgment confronting the individual and not the business, the judgment holder cannot garnish the business concern bank account directly. Instead, the judgment holder would accept to focus its collection efforts on the debtor'due south ownership involvement in the business organisation.

If the business is a single-member LLC, the judgment creditor tin can levy (strength the auction) of the business to become into the business bank account, so a unmarried-fellow member LLC is not an effective form of asset protection. Nonetheless, if the business is a multi-member LLC, then the judgment creditor's exclusive remedy in Florida would be to obtain a charging lien on any distributions from the LLC to the judgment debtor. In this situation, if the LLC does not make whatsoever distributions, so the creditor gets goose egg.

There are sometimes ways for the judgment debtor to still obtain money sitting in a multi-member LLC banking concern account without really having the LLC make a distribution, depending on the language in the LLC operating understanding.

Often Asked Questions

What type of banking company accounts cannot exist garnished?

There are only a few bank accounts in the U.Southward. that cannot be garnished. Almost every country in the U.S. allows a civil judgment creditor to garnish a banking company business relationship belonging to the judgment debtor. The laws of these states apply every bit to any blazon of banking company, whether it be a brick and mortar depository financial institution or internet bank.

A banking company that cannot be garnished would have to exist solely located in a country that prohibits bank account garnishments. Otherwise, the creditor could serve a garnishment at a banking company branch in an unprotected country. Learn more than most asset protection techniques here.

Can a creditor garnish your depository financial institution account without notice?

Yes, in most states, a creditor tin garnish a judgment debtor's bank account without detect. If a creditor were required to give a debtor avant-garde detect that a judgment creditor was going to garnish an account, then the debtor would take the opportunity to empty the account in advance of the garnishment. Garnishments with notice would not exist an effective collection tool.

How exercise creditors find your bank account?

Judgment creditors can notice where a debtor maintains bank accounts past using postal service-judgment discovery, or discovery in aid of execution. Mail-judgment discovery refers to the creditor collection tools that allow a creditor to find out where the debtor holds assets that are available to satisfy a judgment. These tools include inspection of the debtor's taxation returns, banking concern statements, financial records, and the debtor's testimony under oath about his assets. In that location likewise are services that search national cyberbanking records to discover a debtor's banking history.

Tin an LLC bank account be garnished?

An LLC bank account tin be garnished if in that location is a judgment against the LLC. However, if at that place is a judgment against the LLC possessor, a creditor cannot direct garnish the bank business relationship of the owner'southward LLC. A creditor can obtain a charging lien against the LLC, prohibiting the LLC from distributing money from the LLC account to a debtor member.

Can a creditor have all the money in your banking concern account?

In virtually situations, a creditor can take all of a debtor'south coin in the debtor's bank business relationship, if the money is not otherwise exempt, up to the corporeality of the judgment. However, money in the debtor'south garnished depository financial institution account that was deposited by a non-debtor who is co-possessor of a joint bank business relationship may be released from the garnishment freeze.

The not-debtor has to go to court to assert ownership of his money in the joint depository financial institution account. For instance, suppose a judgment debtor shares title to a bank business relationship with an elderly parent. In that instance, the judgment debtor may defeat the garnishment by asserting that the funds exercise non belong to him despite his name actualization on the account title.

If your banking concern business relationship is levied, can you lot open a new business relationship?

A depository financial institution account levy, or garnishment, is a proceeding against a bank to plow over to the creditor any corporeality the bank owes to the debtor (the business relationship remainder). Withal, the bank account garnishment is not an injunction on the debtor's personal banking. In other words, the debtor may open upward additional accounts, whether at the same bank or any other banking concern.

Tin a debt collector garnish a joint depository financial institution business relationship?

In full general, a debt collector can garnish the debtor's interest in a joint bank account. The creditor has this ability even if the joint owner is non liable for the judgment. In improver, if the money in the account is derived solely from the non-debtor articulation owner, so the debtor whose name appears in the account title could prove that they have simply bare legal title to the money and no equitable rights field of study to garnishment. As stated in a higher place, joint accounts owned by married persons are exempt from garnishment directed at either spouse individually under the laws of Florida and a few other states.

Can a savings account be garnished?

Yes, a savings account can be garnished. A bank account garnishment makes no distinction between checking accounts, savings accounts, money-market accounts, online savings accounts, or CDs. It applies to all varieties of financial accounts.

How ofttimes can a creditor levy a bank account?

A creditor can repeatedly levy, or garnish, a depository financial institution during the life of a judgment. While the creditor cannot harass a judgment debtor, repeated levies or garnishments of banking concern accounts alone do non constitute harassment, especially if the funds in the bank account are mostly not exempt.

Protecting a depository financial institution account from creditor levy requires understanding the legal tools a creditor will likely use to freeze a debtor's depository financial institution business relationship and take the money in the business relationship.

How long can your bank account be frozen for?

In a garnishment, a depository financial institution account is frozen until the garnishment process is fully resolved, which takes 1-iv months. There are many reasons why a debtor may claim exemption from garnishment of money in a banking concern account, including, for example, accounts holding retirement funds, social security, or entireties accounts in the case of a married debtor.

Most states provide that money from an exempt asset retains its exemption after it is deposited in the debtor'southward bank accounts. The debtor must claim and prove their exemptions in court. The legal process typically lasts at least a month, but could go on for two months or longer if the creditor fights the claim of exemption.

How does a levy on a bank business relationship work?

In a bank business relationship levy, a judgment creditor first gets a court to issue a writ of garnishment based on the corporeality of the judgment. A writ of garnishment is directed towards a item depository financial institution. Then, the creditor serves the banking concern with the writ of garnishment. A banking company that has been served a writ of garnishment must, with few exceptions, freeze all accounts belonging to the judgment debtor, even joint accounts.

In Florida, the creditor must follow strict procedures when garnishing a debtor's account. 1 of these procedures involves mailing the debtor a copy of the garnishment documentation, including a Claim of Exemption form. If the debtor files the claim of exemption, the debtor may exist entitled to a hearing on the claim and could try to have the garnishment dissolved.

How long does it accept to garnish a bank account?

Typically one-two weeks. Once a judgment creditor files a motion for a writ of garnishment, the court volition typically issue the writ within a few days. Some courts/judges accept longer than others. One time issued, all a creditor has to do is serve the banking company garnishment documents, which does not take long.

Can debt collectors see your depository financial institution business relationship balance?

A debt collection can see your bank account rest using post-judgment discovery. A judgment creditor has many tools to detect the precise nature and amounts of your assets. While a creditor cannot easily look upwards your depository financial institution account residuum at volition, the creditor can serve the bank with a writ of garnishment without much expense.

The bank in response typically must freeze the business relationship and file a response stating the verbal rest in any bank account held for the judgment debtor.

In addition, the judgment creditor can subpoena a bank for bank statements or other records, which would reveal a typical residue in the account.

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Source: https://www.alperlaw.com/florida-asset-protection/protect-bank-account-creditors/

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