How to Open a Bank Account That No Creditor Can Touch

What Is a Bank Account Garnishment?

A bank account garnishment allows a judgment creditor to legally collect money from a debtor’s bank. A bank account garnishment is allowed in almost every state. The funds must be frozen by the bank once it is served with a writ of garnishment.

The process to garnish a bank account is outlined by state law. To garnish a bank account, the creditor must (1) obtain a writ of garnishment, (2) serve the writ on the bank, (3) notify the debtor, and (4) obtain a final judgment of garnishment.

How to Open 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.

1. Open an Exempt Bank Account

An “exempt bank account” is an account that contains funds that a creditor cannot use to satisfy a money judgment. The most common exempt bank account is an account owned jointly by married couples as tenants by entireties. Tenants by entireties bank accounts are exempt from garnishment by a judgment creditor of either spouse.

The accounts are not exempt from creditors of both spouses, however.

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

A judgment debtor can best protect a bank account by using a bank in a state that prohibits bank account garnishment. 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.

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.

4. Open a Wage Account or Government Benefit Account

Some states, such as Florida, have statutes that 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 by federal laws.

Can Your Bank Account Be Garnished Without Notice?

Florida law requires the creditor to serve you a notice of garnishment. The notice spells out your rights under the garnishment procedure.

The creditor does not need to notify you before starting the garnishment. The creditor can wait until after the writ of garnishment is served on the bank.

States That Prohibit Bank Garnishment

There are five states that prohibit bank account garnishments for accounts with low balances: South Carolina, Maryland, North Dakota, New York, and New Hampshire.

There are also states with laws that prohibit the attachment of garnishments onto banking institutions.

What Is a Bank Account Levy?

A bank account levy allows a judgment creditor to seize funds in a bank account. A bank account levy is the most common collection tool used by creditors. The money in the account must be paid over to the judgment creditor if the debtor does not claim an applicable exemption.

To levy a bank account, a creditor must (1) file a motion to garnish the bank account, (2) serve the order to levy onto the bank, (3) provide notice of the levy to the judgment debtor, and (4) get a final judgment directing the bank to disburse funds to the creditor.

Bank Account Garnishment Procedure

In Florida, bank account garnishment is authorized by Chapter 77 of the Florida Statutes.

A judgment creditor can request that a court issue a writ of garnishment. The creditor serves the bank with the garnishment.

The bank must freeze all accounts that have the debtor’s name on the title and all safe deposit boxes.

What to Do When Your Bank Account Is Garnished

If your bank account is garnished, you should:

1. Review the source of funds in the account.
2. Obtain the signature card.
3. Fill out a claim of exemption.
4. Evaluate the garnishment procedures.

Defenses to Bank Garnishment

The most important defense to garnishment is the head of household exemption. You can defend against a bank account garnishment if it contains wages from someone who is head of household.

If the bank account contains other money that is exempt, such as annuity proceeds or retirement income, you can file a claim of exemption.

How to Hide Bank Accounts from Creditors

You can’t hide a bank account from creditors. Judgment creditors can find where a debtor maintains bank accounts by using post-judgment discovery. A creditor has several methods of forcing a debtor to answer questions under oath about the debtor’s financial accounts, cash on hand, and any other source of money that the debtor has available.

Some creditor discovery tools include:

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

Can a Bank Account in Another State be Garnished?

An out-of-state bank account cannot be levied by a Florida court. 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 the judgment debtor 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 itself.

Frequently Asked Questions