Can you create a bank account that no creditor can touch? Then, there are some ways you can follow. Some processes can help avoid freezing or holding, and some work more than that. This article has details about Garnishment and how to prevent the Garnishment. Please read it carefully.
What is meant by Garnishment?
Bank account garnishment means a creditor will deduct the funds in your account or from wages. This process is under debt collection. The Garnishment is under the court’s orders after the judgment. Some Federal banks, like IRS in the USA, don’t need a court order. There are some states with bank accounts that no creditor can touch.
Ways to make that no creditor can touch a bank account?
As we know, prevention is always better than a cure. So always prefer a bank account garnishment. There are some preventive ways you can try. They are,
- You use a bank account that has liquid assets so that you can pay immediately to the creditor.
- Follow all the legal procedures and obtain a writ of Garnishment.
- Always have an extra bank account.
- Create a bank account that no creditor can touch.
How to create a bank account that no creditor can touch?
There are many ways to make a bank account that no creditor can touch. They are,
Open a bank account for benefits:
This account is possible only for a person who is receiving help from the government. Open a separate bank account for government benefits. Some of the benefits are,
- Social security disability benefit.
- Benefits for veterans.
- Gifts of life insurance.
- Pension benefits.
- Spose benefits/ child care benefits.
- Unemployment compensation.
- Benefits from social security.
Open a bank account for your LLC:
Open a bank account under your LLC, Limited Liability Corporation, and put your funds in that account. This is the other way you can avoid a creditor. So in this process, the company funds and personal funds are separated. If you put it in LLC, it is not liable for debts or you.
So the creditors of any bank can credit money for corporate debts but not personal debts.
Creating a bank account that has a prohibition on wages is allowed:
It is best to create a bank account in a bank that doesn’t take funds from a wage account. To make this account, you must remember the bank’s complete details. Double-check the bank address, location, state, and class exemption.
Even though this is one of the best ways, it also has disadvantages. It is wholly based on state law. By creating this way, we can use a bank account that no creditor can touch.
Open a bank account outside America:
The best way to protect your assets is by creating a bank account outside the USA. America and other countries have different laws and rules. So you open a bank account in another country that offers prohibition on Garnishment. This makes it difficult for a creditor to take funds from your bank account.
States that prohibit account garnishment for small amounts:
- South Carolina
- North Dakota
- New York.
- New Hemisphere
States that have prohibitions on a wages bank account so that you can have a bank account that no creditor can touch:
- North Carolina
- South Carolina
What to do if a bank account is garnished?
Even though you create a bank account that a creditor cannot touch, sometimes it gets garnished. There may be many reasons for that. Follow the steps below after an invoice is garnished.
- Review all the sources of your funds in your account,
- You must get a signature card.
- They fill out the claim of exemption form.
- Finally, evaluate all the garnishment procedures.
Collecting debts from benefits accounts, wages accounts, accounts created outside the country, and joint accounts is prohibited.
Yes, some creditors collect their debt from the bank account without notice. If it happens, immediately confront the bank and deal with the issue.
Yes, it is possible to create another bank account even if it is levied.
The amount depends on the judgment given in the court.