How to Open a Bank Account That No Creditor Can Touch

No bank account is completely immune from all creditors, but exempt bank accounts—accounts containing legally protected funds or structured to shield assets—can offer substantial protection.

Understanding what qualifies as an exempt bank account and how to establish one can mean the difference between losing your savings and keeping essential funds safe.

This comprehensive guide examines federal and state garnishment exemptions, explains how account ownership structures affect your protections, and provides actionable strategies for legally shielding your money from judgment creditors.

What Is an Exempt Bank Account?

An exempt bank account is a bank account containing funds that are legally protected from creditor garnishment under federal or state law. These protections stem from two sources: the type of funds deposited in the account (such as Social Security benefits, SSI, VA payments, or wages in certain states) and how the account is structured or titled (such as tenants by the entirety accounts for married couples).

The term “exempt” means creditors cannot legally seize these funds to satisfy a judgment, even though a valid court order exists. However, “exempt bank account” is somewhat of a misnomer—it’s the funds inside the account, not the account itself, that carry exempt status. The same checking account might contain both exempt funds (protected Social Security deposits) and non-exempt funds (income from side work), making only a portion immune from garnishment.

Key characteristics of exempt bank accounts include:

• Source-based protection: Funds derive from legally protected income streams like federal benefits, certain retirement accounts, or disability payments
• Structure-based protection: Account ownership arrangements that shield assets, such as properly titled tenants by the entirety accounts in applicable states
• State-specific exemptions: Wildcard exemptions, deposited wage protections, or statutory minimum balances that vary by jurisdiction
• Conditional protection: Many exemptions require you to prove the source of funds and file timely exemption claims when garnishment occurs

Federal law provides automatic protection for government benefits

The strongest bank account protections come from federal law, which shields certain benefit payments regardless of which state you live in. Under 31 CFR Part 212, banks must automatically protect two months’ worth of directly deposited federal benefits—no action required from account holders.

The two-month lookback rule

When a garnishment order arrives at your bank, the institution must review your account’s deposit history for the prior 60 days (the “lookback period”). The bank calculates the total federal benefit payments deposited during this window and establishes a “protected amount” equal to the lesser of those deposits or your current balance.

For example, if you receive $1,800 monthly in Social Security benefits, the protected amount is $3,600 (two months). Even if a creditor serves a garnishment order, your bank must leave that $3,600 fully accessible to you.

Federal benefits protected by statute

Benefit Type	Statutory Authority	Protected From Private Creditors	Subject to IRS Levy	Subject to Child Support
Social Security (OASDI)	42 U.S.C. § 407	Yes	Yes (15%)	Yes (50-65%)
Supplemental Security Income (SSI)	42 U.S.C. § 1383(d)(1)	Yes	No (policy)	No
VA Benefits	38 U.S.C. § 5301	Yes	Yes	Limited
Federal Pensions (FERS/CSRS)	5 U.S.C. §§ 8346, 8470	Yes	Yes	Yes
Railroad Retirement	45 U.S.C. § 231m	Yes	Yes (15%)	Yes (Tier I)

The critical distinction: SSI benefits receive the strongest protection. Unlike Social Security retirement or disability benefits, SSI cannot be garnished even for child support because it’s not based on employment earnings.

Direct deposit is essential for automatic protection

Federal benefit protection under 31 CFR Part 212 applies only to electronically deposited funds. If you deposit a paper benefit check, the bank has no obligation to automatically protect those funds—you must prove exemption in court. Enrollment in direct deposit is available at godirect.gov or by calling 1-800-333-1795.

State exemptions create a patchwork of additional protections

Beyond federal protections, each state establishes its own exemption laws that can protect additional bank account funds. These vary dramatically—from no protection in states like Kansas and Utah to $10,000 or more in states with generous wildcard exemptions.

Four states prohibit wage garnishment for consumer debt

Texas, Pennsylvania, North Carolina, and South Carolina provide exceptional protection by prohibiting creditors from garnishing wages for most consumer debts. However, this protection typically ends once wages are deposited—transformed into “cash,” they become vulnerable in most states.

Critical exception: In states with “traced wages” protection (California, Colorado, Connecticut, Florida, Minnesota, Nebraska, Oregon, and others), wages retain exempt status for a period after deposit if you can prove their source.

Florida’s head-of-household exemption is particularly powerful: if you provide more than half the support for a child or dependent and earn $750 per week or less (net), your wages remain 100% protected—and stay exempt in your bank account for six months under Fla. Stat. § 222.11(3).

State-by-state exemption comparison

The following table summarizes bank account protections across all 50 states, including specific exemption amounts, wildcard provisions that can protect cash, and relevant statute citations.

States with strongest bank account protections

State	Bank Account Exemption	Wildcard Available	Wage Garnishment Limit	Key Statute
Texas	No specific amount	$50,000-$100,000 personal property	Wages exempt from consumer debt	Tex. Prop. Code § 42.001
Florida	Source-dependent	$4,000-$8,000	Head of household: 100% exempt	Fla. Stat. § 222.11
Pennsylvania	$300	Limited	Wages exempt from consumer debt	42 Pa. C.S.A. § 8123
North Carolina	$5,000 (wildcard)	$5,000	Wages exempt from consumer debt	N.C. Gen. Stat. § 1C-1601
South Carolina	$5,000 liquid assets	$5,000 additional	Wages exempt from consumer debt	S.C. Code § 15-41-30
Delaware	Banks largely exempt from attachment	$500	85% of wages protected	10 Del. C. § 3502

States with moderate bank account protections

State	Bank Account Exemption	Wildcard Available	Wage Garnishment Limit	Key Statute
California	$2,170 (automatic)	Support-based additional	75% or 40x min. wage	Cal. CCP § 704.220
New York	$3,720-$3,960 (automatic)	N/A	90% or statutory threshold	CPLR § 5222-a
Arizona	$5,400	N/A	90% under Prop. 209	A.R.S. § 33-1126
Virginia	$5,000 + $500/dependent	Applies to bank accounts	40x min. wage + dependent amounts	Va. Code § 34-4
Wisconsin	$5,000	Limited additional	Federal poverty amount	Wis. Stat. § 815.18
Oregon	$2,500 (automatic, new 2025)	Federal option available	75% or 50x min. wage	ORS 18.345
Nevada	Via wildcard	$10,000	82% or 50x min. wage	Nev. Rev. Stat. § 21.090
Tennessee	Via wildcard	$10,000	30x min. wage + $2.50/child	Tenn. Code § 26-2-102
Maryland	$500 (automatic)	$6,000 additional	75% or 30x state min. wage	Md. CJP § 11-504
Washington	$500-$2,500 (automatic, varies by debt type)	Doubles for married couples	80% or 35x state min. wage	RCW 6.15.010
Massachusetts	$2,500	$1,000-$6,000	85% or 50x min. wage	MGL Ch. 235, § 34
Illinois	$4,000 (wildcard); $1,000 automatic (2026)	$4,000	85% or 45x min. wage	735 ILCS 5/12-1001
Minnesota	20-day deposited wage protection	Federal option ($17,475)	75% or 40x state min. wage	Minn. Stat. § 550.136
New Hampshire	Up to $8,000	Federal option available	50x min. wage	N.H. Rev. Stat. § 511:2
South Dakota	$7,000 (wildcard)	Applies to bank accounts	80% or 40x state min. wage	S.D. Codified Laws § 43-45-2
Nebraska	$5,000 (wildcard)	Deposited wages protected	85% of disposable earnings	Neb. Rev. Stat. § 25-1552
Colorado	None specific	N/A	80% or 40x state min. wage	Colo. Rev. Stat. § 13-54-104
Connecticut	$1,000	Federal option ($17,475)	75% or 40x state min. wage	Conn. Gen. Stat. § 52-352b
Alabama	Via wildcard	~$8,000	Federal limits apply	Ala. Code § 6-10-6
Mississippi	$10,000 (cash on hand)	Included in $10,000	Federal limits apply	Miss. Code § 85-3-1
New Mexico	Via wildcard	$5,500	40x min. wage	N.M. Stat. § 42-10-1
New Jersey	$1,000	Applies to personal property	10-25% (income-based)	N.J.S.A. 2A:17-50
Alaska	$2,970	Federal option ($17,475)	$743/week if sole support	Alaska Stat. § 09.38.010

States with limited bank account protections

State	Bank Account Exemption	Wildcard Available	Wage Garnishment Limit	Key Statute
Ohio	None specific	$525	25% federal limit (extends to deposits)	Ohio Rev. Code § 2329.66
Georgia	$500 (limited)	Limited	25% federal limit	O.C.G.A. § 18-4-6
Michigan	None specific	Limited	25% federal limit	MCL 600.6023
Indiana	$350	Limited	Federal limits	Ind. Code § 34-55-10-2
Missouri	None	None	25% or 30x min. wage	Mo. Rev. Stat. § 525.030
Kentucky	None specific	$1,000 or federal option	Federal limits	Ky. Rev. Stat. § 427.160
Oklahoma	None specific	Limited	75% or hardship	12 O.S. § 1151
Iowa	$100	Limited	75% or 40x min. wage	Iowa Code § 627.6
West Virginia	$1,100	Limited	80% or 50x min. wage	W. Va. Code § 38-8-1
Arkansas	$800-$1,250	Federal option available	Federal limits	Ark. Code § 16-66-218
Idaho	$800	$800	Federal limits	Idaho Code § 11-605
Vermont	$700	Federal option ($17,475)	85% or 40x min. wage	12 V.S.A. § 2740
Maine	$400	Limited	75% or 40x state min. wage	Me. Rev. Stat. tit. 14 § 4422
Rhode Island	None specific	Federal option ($17,475)	Federal limits	R.I. Gen. Laws § 9-26-4
Hawaii	None specific	Federal option ($17,475)	Tiered: 80-95%	Haw. Rev. Stat. § 651-121

States with minimal or no bank account protections

State	Bank Account Exemption	Wildcard Available	Wage Garnishment Limit	Key Statute
Kansas	None	None	25% federal limit	Kan. Stat. § 60-2308
Louisiana	None	None	25% federal limit	La. Rev. Stat. § 13:3881
Utah	None	None	25% federal limit	Utah Code § 78B-5-505
Wyoming	None	None	25% federal limit	Wyo. Stat. § 1-15-511
Montana	None specific	None	Federal limits	Mont. Code § 25-13-608
North Dakota	None specific	Limited	40x min. wage + $20/dependent	N.D. Cent. Code § 32-09.1

Account ownership structures significantly affect garnishment exposure

How your account is titled can dramatically expand or eliminate creditor protections. Understanding these structures helps you make informed decisions about where to hold funds.

Joint accounts with non-debtor spouses

Tenants by the entirety (TBE) offers the strongest protection for married couples. In TBE states—including Florida, Maryland, Massachusetts, New Jersey, Pennsylvania, Tennessee, Virginia, and others—creditors of only one spouse cannot touch jointly-held TBE accounts. The debt must be joint for a creditor to reach TBE property.

In community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin), debts incurred during marriage may be considered marital debts, potentially exposing joint accounts to either spouse’s creditors.

For non-spouse joint accounts, protection is limited. Many states allow creditors to garnish the entire balance, forcing the non-debtor co-owner to prove their specific contributions through bank records—a difficult burden.

Trust accounts offer varying protection

Revocable living trusts provide zero creditor protection. Because the grantor can modify or terminate the trust at will, courts treat trust assets as the grantor’s property, fully accessible to creditors.

Irrevocable trusts offer substantial protection because assets legally belong to the trust, not the grantor. However, transfers made to avoid existing creditors can be reversed as fraudulent conveyances, and distributions to beneficiaries become vulnerable to those beneficiaries’ creditors.

Business accounts and entity separation

Sole proprietor accounts have no protection—personal and business assets are legally one and the same. An “EIN” or “DBA” designation provides zero separation.

LLC and corporate accounts are generally protected from owners’ personal creditors, provided you maintain strict separation: never commingle personal and business funds, keep separate records, and observe corporate formalities. Failure to maintain this separation can result in “piercing the corporate veil,” allowing personal creditors to reach business accounts.

How to open a bank account that maximizes legal protection

While no account structure makes you completely judgment-proof, strategic account management significantly reduces garnishment exposure.

Step 1: Open a dedicated account for exempt funds

Keep a separate bank account exclusively for protected income sources—Social Security benefits, VA payments, pension deposits, and (in applicable states) wages. Never deposit non-exempt funds into this account.

Why separation matters: Under 31 CFR § 212.5(f), banks are not required to trace funds transferred between accounts. If you move exempt Social Security deposits from Account A to Account B, the automatic federal protection does not follow. Only the original receiving account retains automatic protection.

Step 2: Enroll all federal benefits in direct deposit

Paper check deposits lose automatic protection under 31 CFR Part 212. With direct deposit, your bank must automatically protect two months’ worth of benefits without any action from you.

Alternative option: The Direct Express® prepaid debit card, administered by the Treasury Department for federal benefit recipients, offers enhanced protection because funds are generally unreachable by private creditors through traditional garnishment mechanisms.

Step 3: Maintain meticulous records

If your account is frozen, you’ll need to prove which funds are exempt. Keep organized records including:

• Bank statements for at least 60 days (preferably 3+ years)
• Benefit award letters showing payment amounts and dates
• Pay stubs matching deposit amounts (for wage exemption claims)
• Direct deposit confirmations proving electronic (not check) deposits

Step 4: Understand your state’s specific requirements

Account titling requirements vary by state. For tenants-by-the-entirety protection in applicable states, accounts typically must be explicitly titled as TBE between married spouses. Consult your state’s specific requirements or an attorney to ensure proper titling.

Step 5: Avoid the commingling trap

The single most common way people lose exemption protection is by commingling exempt and non-exempt funds. When mixed together, tracing becomes difficult or impossible, and courts may rule the entire balance unprotected.

If you must maintain a single account with mixed funds, document every deposit source meticulously and spend non-exempt funds first—a practice called the “lowest intermediate balance” rule in some jurisdictions.

Super creditors can pierce otherwise exempt funds

Not all creditors face the same limitations. Certain “super creditors” hold powers that override standard exemptions.

IRS tax levies

The IRS can levy bank accounts without a court judgment under IRC § 6331, and federal tax collection overrides most exemption protections. The IRS can garnish up to 15% of Social Security benefits through the Federal Payment Levy Program and can pursue funds that private creditors cannot touch.

However, the IRS must provide a Final Notice of Intent to Levy at least 30 days before action, and you have the right to a Collection Due Process hearing.

Child support enforcement

Child support agencies can garnish 50-65% of disposable earnings—far exceeding the 25% limit for general creditors—and can serve garnishment orders directly on banks with a “Notice of Right to Garnish Federal Benefits,” bypassing the automatic federal benefit protections under 31 CFR Part 212.

SSI remains protected: Unlike Social Security retirement and disability, SSI payments cannot be garnished even for child support because they’re not based on employment earnings.

Federal student loan collections

After the pandemic pause ended in May 2025, the Department of Education resumed administrative wage garnishment of up to 15% of disposable earnings—without requiring a court judgment. Tax refund offsets have resumed, though Social Security offsets remain paused as of early 2026.

Responding to a bank account freeze

When a garnishment order freezes your account, time is critical. Most states give you only 10-30 days to claim exemptions.

Immediate steps

1. Contact your bank to understand what’s frozen versus protected
2. Request copies of the garnishment order and exemption claim forms
3. Identify the deadline for claiming exemptions (varies by state)
4. Gather documentation proving exempt fund sources
5. Complete and file exemption claim forms before the deadline

Critical deadlines by jurisdiction

Filing deadlines range from 10 days (Georgia) to 30 days (Maryland). Missing your deadline by even one day can result in permanent loss of funds. When in doubt, file your exemption claim immediately.

What banks must do

Under 31 CFR Part 212, banks must send written notice within 3 business days of receiving a garnishment order, provide exemption claim forms, and ensure you retain full access to the automatically protected amount. Banks cannot charge garnishment processing fees against protected funds.

Protections have important limitations

Understanding what exemptions cannot do is as important as knowing what they protect.

Exemptions apply per garnishment: Claiming an exemption protects only the funds at issue in that specific garnishment. Creditors holding valid judgments can attempt garnishment repeatedly—potentially for 10-20 years in most states—requiring you to claim exemptions each time.

Protection duration varies: Federal benefit protection covers two months of deposits automatically. Beyond that, excess funds may be vulnerable. Some states protect deposited wages for defined periods (Florida: 6 months; Minnesota: 20 days), while others offer no post-deposit protection.

Judgment creditors can try again: A single exemption claim doesn’t permanently shield your account. Maintain the same protective practices indefinitely.

Conclusion

Protecting bank accounts from garnishment requires understanding both federal baseline protections and your state’s specific exemption laws. Federal law guarantees two months of protection for directly deposited government benefits—Social Security, SSI, VA payments, and federal pensions—regardless of where you live. Beyond that, protection depends heavily on your state, ranging from near-total immunity in Texas and Florida to minimal safeguards in states like Kansas and Utah.

The most effective strategy combines account separation (keeping exempt funds isolated), direct deposit enrollment (triggering automatic federal protection), proper account titling (especially TBE for married couples in applicable states), and meticulous record-keeping (proving fund sources if challenged). While no approach makes any account completely untouchable, these measures provide the strongest legally available protection against judgment creditors.

Remember that “super creditors”—the IRS, child support enforcement agencies, and federal student loan collectors—operate under different rules and can reach funds that private creditors cannot.