How to open a bank account that no creditor can touch

Most debtors would like to keep their money in a bank account that no creditor can touch because one of the first things a creditor will do to collect on a judgment is garnish your bank account.

Bank accounts contain liquid assets that can immediately pay the creditor and their attorney. Everyone needs bank account money to pay living expenses and attorney fees, so attacking your bank accounts puts you under financial stress. Obtaining a writ of garnishment against a bank account is a relatively simple legal procedure.

What Is a Bank Account Garnishment?

A bank account garnishment is a legal tool to collect a money judgment. A bank account garnishment freezes money in your bank account, allows you to claim an applicable exemption, and finally sends the funds to the judgment creditor.

Bank account garnishments are allowed under most state laws. If the money in the account is not exempt, the creditor can obtain the money to help pay the judgment. Bank account garnishments are relatively quick and inexpensive. They can be rewarding if there is a lot of money in the account.

Opening a Bank Account That No Creditor Can Touch

There are four ways to open a bank account that no creditor can touch: (1) use an exempt bank account, (2) establish a bank account in a state that prohibits garnishments, (3) open an offshore bank account, or (4) maintain a wage or government benefits account.

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1. Open an Exempt Bank Account

An “exempt bank account” refers to an account that are protected from seizure by creditors. In Florida and some other states, bank accounts owned jointly by married couples as tenants by entireties are exempt from garnishment by a judgment creditor of either spouse. However, the accounts are not exempt from creditors of both spouses. Tenants by entireties ownership of bank accounts is governed by 655.79 of the Florida Statutes.

You do not need to reside in Florida to have an exempt tenancy by entireties account at a Florida bank. Florida law exempts entireties accounts located in the state regardless of where the owners reside. Beware that there are several technical requirements to open an exempt entireties account at those banks that do not offer an entireties option on the account application. It’s best to find a state-chartered Florida bank that expressly provides tenants by entireties accounts and where the entireties designation is expressed on monthly statements.

Your bank will still freeze your entireties account if a creditor serves a writ of garnishment on the bank. You will have to hire an attorney to claim the exemption in a court proceeding and have the court order the garnishment dissolved. A bank may not be held liable for retaining money in a garnished account while you are attempting to dissolve a garnishment writ through court proceedings.

2. Open a Bank Account in a State That Prohibits Garnishments

You are best protected by opening an account at a bank in a state that prohibits bank account garnishment. In that case, your money cannot be tied up by a garnishment writ.

If a state’s laws do not permit creditor garnishment of bank accounts, the debtor can maintain protected cash to pay living expenses and legal bills. Ideally, you would not have to reside in the state that prohibits bank garnishment laws.

There are other states where banks may be totally immune from bank account garnishment. However, most (but not all) banks in these states only accept customers who live in the state where the bank is located. It can be challenging, but not impossible, to find a bank located exclusively in a state that prohibits bank account garnishments that accepts Florida customers.

For most people, there are only a few banks in the U.S. that cannot be garnished to satisfy a monetary judgment.

3. Open an Offshore Bank Account

An offshore bank account is a bank account located outside the United States. While not technically an exempt account, in practice it is very difficult for a judgment creditor to reach funds sitting in an offshore bank account. A Florida court lacks jurisdiction over offshore banks and cannot issue a garnishment directed toward the offshore bank account.

The most well-known offshore bank account is a Swiss bank account, but offshore bank accounts in many countries offer a similar level of protection.

4. Open a Wage Account or Government Benefit Account

Florida statutes exempt the garnishment of wages of the head of the family. In addition, most federal benefits, such as social security or disability payments, are exempt from garnishment.

Protection of these funds remains after they are deposited into your bank account if you can trace them to their exempt source. Tracing is easiest when a bank account contains only funds from the exempt source. You should not mix exempt and non-exempt funds in the same bank account.

Example Use of a Protected Bank Account

James is an unmarried Florida resident with an old judgment for an unpaid credit card bill. The creditor has not tried to collect on its judgment for many years, so James has built up a substantial balance in his bank account.

The judgment creditor has scheduled a deposition in aid of execution, so James is worried that the creditor will find out where he has bank accounts. Because he’s not married, he cannot take advantage of tenants by entireties law to protect the bank account. There are no other exemptions to the money in the account.

In this situation, James may be able to protect the funds by depositing them at a bank immune from garnishment under state law. The creditor’s collection tool would normally be a garnishment. But if the funds are at a bank where state law prohibits garnishment, the money effectively would be protected from the judgment creditor.

Can a Bank Account Be Garnished Without Notice?

Yes, a bank account can be garnished without notice. A judgment creditor does not need to tell you beforehand that it intends to garnish your bank account. If a creditor were required to give a debtor advanced notice of a bank account garnishment, then the debtor would have the opportunity to empty the account in advance of the garnishment.

Under Florida law, a creditor must notify you about a bank account garnishment only after first serving the garnishment on the bank. Once the garnishment documents are served on the bank, the bank will freeze the account. The garnishment notice should explain your rights in the garnishment proceeding and the process for claiming any exemptions you have.

We tell you what you can do to protect your assets.

We’ve advised thousands of clients nationwide on how to protect their assets from creditors. Schedule a phone or Zoom consultation to get started.

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Protecting a Bank Account from Creditors

Judgment debtors need a bank account to secure their savings and future income. Nobody wants to deposit money in a bank account only to lose it to garnishment or bank account levy. People with judgments often want to know how to open a bank account that no creditor can touch.

These are the four best ways to open a bank account that is protected from creditors:

  1. Open an exempt account, such as a joint marital account as tenants by entireties. Tenants by entireties assets are exempt under Florida common law if the debt is only owed by one spouse.
  2. Maintain a bank account in a state that prohibits a judgment creditor from garnishing the bank.
  3. Open an offshore bank account to make garnishment complicated and expensive.
  4. Maintain an account with only exempt funds, such as social security or pension plan distributions. These funds are exempt per Florida or federal statutes.
Exempt bank account

Which States Prohibit Bank Garnishment?

There are five states that prohibit bank account garnishment when the bank account contains only a small amount of money: South Carolina, Maryland, North Dakota, New York, and New Hampshire. In addition, North Carolina, South Carolina, Pennsylvania, and Texas all prohibit wage garnishments for consumer debts.

Depending on the type of judgment, there are other states where banks are totally immune from bank account garnishment. However, for most people, there are only a few banks in the U.S. that cannot be garnished to satisfy a monetary judgment.

What Is a Bank Account Levy?

A bank account levy is a legal action that allows creditors to take funds from your bank account to satisfy a debt. This process occurs after a court has granted a judgment in favor of the creditor. Once a levy is placed, the bank must freeze the required amount in your account, and you cannot access these funds until the debt is resolved or the levy is lifted.

Here are the steps to getting a bank account levy:

  1. Obtaining a Court Judgment: The process begins when a creditor files a lawsuit against a debtor for unpaid debts. If the creditor wins the case, the court issues a judgment in their favor, which is the prerequisite for a bank account levy.
  2. Issuing a Levy Order: Armed with the court judgment, the creditor can request a levy order from the court. This order is directed to the debtor’s bank, instructing it to freeze the specified amount in the debtor’s account.
  3. Bank Freezes the Account: Upon receiving the levy order, the bank is legally bound to freeze the amount specified. The bank also notifies the account holder of the levy. During this period, the account holder cannot access the frozen funds.
  4. Transfer of Funds: If the debtor does not contest the levy or the contest is unsuccessful, the bank will eventually transfer the frozen funds to the creditor. This step completes the levy process, with the creditor receiving payment towards the outstanding debt.
  5. Resolution or Contesting the Levy: The debtor has the right to contest the levy, typically by proving the funds are exempt from seizure (like social security payments) or that the levy was procedurally flawed. If successful, the levy may be lifted or reduced.

Bank Account Garnishment Procedures

Bank account garnishment procedures are authorized by Chapter 77 of the Florida Statutes. Under Florida Statute Section 77.03, a judgment creditor can request that a court issue a writ of garnishment. The creditor serves the garnishment on a bank. The bank must freeze all accounts with the debtor’s name on the title and all safe deposit boxes under Section 77.06 of Florida Statutes.

Creditors garnish banks—creditors do not garnish bank accounts. The creditor does not have to identify accounts or other assets at your bank. Your bank must freeze all accounts you own in whole or in part upon receipt of a writ of garnishment.

Banks are not responsible for determining whether you have applicable garnishment exemptions. You must assert exemptions applicable to certain accounts or show that the money in your account belongs to someone else.

What Should You Do When Your Bank Account Is Garnished?

If your bank account is garnished, you should:

  1. Review the source of funds in the account. Was the money deposited from an exempt source, such as a retirement account or an annuity? Or do the funds belong to someone else?
  2. Obtain the signature card. Ask your bank for a copy of the signature card to make sure your joint marital account is owned as tenants by entireties.
  3. Fill out a claim of exemption. You must file a claim of exemption to dissolve the garnishment if the funds in the account are exempt by statute.
  4. Evaluate the garnishment procedures. Review what the creditor filed in the case and see if they violated any aspect of state garnishment law procedures.

What Are the Defenses to a Bank Account Garnishment?

Florida debtors can defend a bank account garnishment by taking advantage of the state’s asset exemptions and garnishment procedures. Florida courts have held that money distributed to a debtor from most exempt sources retains its exemption after the exempt money is deposited in a bank account.

There are also procedural defenses to garnishment. Florida garnishment statutes impose many procedural requirements and time deadlines upon creditors. The garnishment rules are strictly enforced. A garnishment that deviates in any way from the statute’s garnishment procedural rules should be dissolved and the funds released.

A bank may not be held liable for retaining money in a garnished account while you pursue a defense through court proceedings. However, there is an exception for social security proceeds: a garnished bank is required to release immediately from garnishment all money traceable to your social security payments.

A judgment creditor can still try to garnish a bank even if your accounts have only exempt funds. A creditor is rarely liable for an unsuccessful writ of garnishment.

We help protect your assets from creditors.

We offer customized advice for clients throughout Florida. Get answers for your specific situation by phone or Zoom.

Alper Law attorneys

How to Hide Bank Accounts from Creditors

People want to know how to hide money from creditors. Hiding a bank account from creditors is usually not an effective asset protection strategy.

Judgment creditors can find where you have bank accounts by using post-judgment discovery. A creditor has several methods to have you answer questions under oath about your financial accounts, cash on hand, and any other available source of money. The creditor’s many discovery tools prevent effectively hiding a bank account other than lying under oath.

Some creditor discovery tools to find your bank accounts include:

  • oral deposition under oath
  • written interrogatories (a list of questions you must answer under oath)
  • requests to produce your accounting statements and other financial documents
  • Florida’s standard fact information sheet (a financial statement)
  • examination of your federal tax returns that show bank interest income.

A creditor may identify your financial accounts wherever located or identify any person or company owning financial accounts on your behalf using a combination of these discovery methods.

You may be liable for contempt of court and criminal perjury if you answer questions untruthfully or provide misleading or incomplete answers. Not only do false and misleading descriptions under oath expose you to unnecessary civil sanctions or criminal liability, but evasive answers also undermine your credibility in subsequent court proceedings.

Proper asset protection planning does not involve hiding assets from creditors.

Can a Bank Account in Another State be Garnished?

A Florida court cannot garnish your bank account in another state. Several Florida courts have ruled that a garnishment requires both in-personam and in-rem jurisdiction. In other words, the Florida court must have jurisdiction over both you and the funds being garnished.

When the funds are located at a bank account outside Florida, the court lacks in-rem jurisdiction, meaning that the Court does not have jurisdiction over the bank account and the funds being garnished.

Some creditors have tried to argue that modern bank accounts are not located in any state, which would alleviate the requirement of in-rem jurisdiction. Courts have rejected this argument so far.

Garnishment of Offshore Bank Accounts

Many people consider opening offshore bank accounts not subject to U.S. garnishment statutes and writs.

U.S. citizens cannot easily open offshore accounts in their individual names because of international anti-terrorism rules. Offshore bank accounts can mostly be established through asset protection entities such as offshore trusts or offshore limited liability companies set up through attorneys.

Offshore trust accounts have disadvantages. Forming offshore entities and offshore banking is complicated and expensive, and you must relinquish control over these entities and their bank accounts to offshore trustees and managers to be effective asset protection. Transfers of funds to offshore entities are subject to attack as fraudulent conveyances under the fraudulent transfer statutes.

A few offshore banks have recently allowed U.S. individuals to open an account individually without forming an offshore LLC or trust. These banks have large minimum deposit policies.

Garnishment of Business Bank Accounts

A person who owns a business can avoid personal garnishment by keeping funds in their business instead of distributing the funds to themselves.

If the creditor has a judgment against you individually and not your business, the creditor cannot garnish the business bank account directly. Instead, the creditor must focus its collection efforts on your ownership interest in the business.

The creditor could levy on your stock in a corporation. If the business is a partnership or a  multi-member LLC, then the judgment creditor’s exclusive remedy in Florida would be a charging lien on any distributions.

If the LLC does not make any distributions, then the creditor gets nothing. There are sometimes ways for the judgment debtor to obtain money in a multi-member LLC or partnership bank account without the LLC having made a distribution. The methods available depend on the language in the LLC operating agreement or partnership agreement.

We tell you what you can do to protect your assets.

We’ve advised thousands of clients nationwide on how to protect their assets from creditors. Schedule a phone or Zoom consultation to get started.

Alper Law attorneys

Frequently Asked Questions

Below are answers to commonly asked questions about bank account protection.

What type of bank accounts cannot be garnished?

Almost every state in the U.S. allows a civil judgment creditor to garnish a judgment debtor’s bank. The garnishment laws apply equally to any type of bank, whether it be a brick and mortar bank or an internet bank. A bank that cannot be garnished must have all its branches located in a state that prohibits bank account garnishments. Otherwise, the creditor could serve a garnishment at a bank branch in an unprotected state.

Can I open a new bank account after a garnishment?

Yes, a new account can be opened because the bank account garnishment is not an injunction on the debtor’s personal banking. In other words, the debtor may open additional accounts, whether at the same bank or any other bank.

How do creditors find your bank account?

Judgment creditors can find where you maintain bank accounts by using post-judgment discovery in aid of execution. Post-judgment discovery refers to the creditor collection tools that allow a creditor to find out where you hold available assets to satisfy a judgment. These tools include inspection of your tax returns, bank statements, financial records, and your testimony under oath. There also are services that search national banking records to discover a debtor’s banking history.

Can an LLC bank account be garnished?

An LLC bank account can be garnished if there is a judgment against the LLC. However, A creditor cannot directly garnish the bank account of your LLC if there is a judgment against you individually. A creditor can obtain a charging lien against the LLC, prohibiting the LLC from distributing money to you.

How much can be garnished from a bank account?

In most situations, a creditor can take all the money from your bank account through a garnishment, up to the amount of the judgment. Exempt funds cannot be taken. In addition, money in your bank account that was deposited by a non-debtor who is co-owner of a joint bank account may be released from the garnishment freeze.

The non-debtor must go to court to assert ownership of their money in the joint bank account. For example, suppose you and your elderly parent are joint owners of a bank account to avoid probate at the parent’s death. In that case, you may defeat the garnishment by asserting that the funds do not belong to you despite your name appearing on the account title.

Can a joint account be garnished?

A joint account can be garnished even if the joint owner is not liable for the judgment. If the money in the account is derived solely from the non-debtor joint owner, then the debtor whose name appears in the account title could prove that they have only bare legal title to the money and no equitable rights to the account subject to garnishment. 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 garnishment makes no distinction between checking accounts, savings accounts, money-market accounts, safe deposit boxes, online savings accounts, or CDs. It applies to all financial accounts.

How often can a creditor levy a bank account?

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

How long can your bank account be frozen for?

A bank account is frozen until the garnishment process is fully resolved. Garnishment litigation typically takes 2 to 4 months. Garnishment litigation takes time to resolve a debtor’s claim of exemption or objections to the creditor’s garnishment procedures.

How does a bank garnishment work?

A judgment creditor first gets a court to issue a writ of garnishment based on the amount of the judgment. In Florida, the creditor must follow strict procedures when garnishing a debtor’s account. A writ of garnishment is directed towards a particular bank. The creditor serves the bank with the writ of garnishment.

A bank served a writ of garnishment must, with few exceptions, freeze all accounts belonging to the judgment debtor, even joint accounts. A creditor may ask the court for a sealed writ of garnishment so the debtor does not get notice through search of the court docke. You are entitled to an expedited court hearing on an exemption defense if you believe money is exempt from garnishment.

How long does it take to garnish a bank account?

Typically, it takes 1 to 2 weeks to garnish a bank account. Once a judgment creditor files a motion for a writ of garnishment, the court will typically issue the writ within a few days. Some courts/judges take longer than others. Once issued, the creditor serves the bank garnishment documents, and the bank freezes all accounts with the debtor’s name on the title.

Can debt collectors see your bank account balance?

A judgment creditor cannot see your online account balances. But a creditor can ascertain account balances using post-judgment discovery. The judgment creditor can subpoena a bank for bank statements or other records which reveal a typical balance in the account.

Can Cash App be garnished?

Yes, Cash App and similar electronic funds wallets can be garnished. Cash App is run by a company called Block, Inc. The Cash App Terms of service explicitly states that they will adhere to garnishment orders and may freeze, withhold, or give up funds in your account in response to a legal garnishment order.

Can a debt collector take money from my bank account without authorization?

A debt collector must first file a lawsuit against you and obtain a monetary judgment before it can take any money from your bank account. A debt collector cannot take money from your account until a judgment is obtained in a court proceeding.

How long does it take to open an exempt bank account?

It takes about 1-3 weeks to open an exempt bank account. After your attorney introduces you to the bank, you submit an application and pass a background check, and then you can transfer funds to the new account.

Gideon Alper

About the Author

I’m an attorney who specializes in asset protection planning. I graduated with honors from Emory University Law School and have been practicing law for almost 15 years.

I have helped thousands of clients protect their assets from creditors. Before private practice, I represented the federal government while working for the IRS Office of Chief Counsel.

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