How to Open a Bank Account That No Creditor Can Touch?

Many individuals who owe debts maintain substantial funds in depositary accounts or money market statements offered by financial institutions. When a creditor seeks to collect a judgment, they often initiate the process by garnishing the debtor’s economic institution statement. Bank accounts are considered a valuable source of liquid assets that can be promptly utilized to satisfy the debt owed to the creditor, including any legal fees incurred. Since debtors rely on the funds in their depositary statements to cover living expenses and attorney fees, targeting these accounts places significant financial strain on them. Obtaining a writ of garnishment to seize the funds in a depositary statement is generally a straightforward legal procedure for creditors.

What is The Bank Account Garnishment?

A bank statement garnishment is a legitimate approach utilized by creditors to enforce their financial judgments. This technique is allowed in most states. When the money in a debtor’s bank account is not protected from garnishment, the creditor can take hold of that money to settle the unpaid judgment. Bank statement garnishments are highly favored as a means of collection because they are quick, cost-effective, and have the potential to yield significant returns, especially when the statement shows a sizable sum of money.

Four Effective Approaches to Protecting Your Bank Account From Creditors

Establish an Exempt Bank Account

In certain states, like Florida, there is a way to open a bank statement that is shielded from creditor garnishments:

• However, it’s important to note that this exemption does not apply to creditors of both spouses simultaneously;
• The regulations governing tenants’ ownership of economic institution statements can be found in section 655.79;
• Importantly, debtors are not required to reside in Florida to maintain exempt entirety accounts at a region-based depositary;
• Regardless of the stated owner’s residence, Florida law provides exemptions for entirety statements located within the state.

Therefore, it is advisable to identify a state-chartered Florida depositary that expressly provides tenants with entirety statements and ensures the entirety’s designation is indicated on monthly statements.

Opening a Bank Account in a State with Garnishment Prohibitions

One effective method for safeguarding an economic institution account against garnishments is to select a depositary located in a state that strictly forbids such actions. By doing so, the debtor’s funds cannot be tied up by a garnishment order while they pursue potential exemptions through legal proceedings. This enables the debtor to retain protected cash for essential expenses and legal fees without the concern of creditor garnishments.

It is important to note that the debtor is not required to reside in the state with garnishment prohibitions; they can choose a secure depositary in that state, such as opening an account in Florida.

Although only a few states completely prohibit creditor garnishments on bank statements regardless of the account balance, some depositaries in these states may have residency requirements, often accepting customers who are residents of the state. Finding a bank located exclusively in a state that prohibits garnishments on bank statements and also welcomes customers from Florida can be quite challenging.

Explore the Option of an Offshore Bank Account

Exploring an alternative approach involves opening an offshore bank account situated outside of the United States. While these accounts may not be explicitly exempt from garnishments, funds held in offshore financial institution statements are notoriously challenging for judgment creditors to seize.

Explore Wage or Government Benefit Accounts

Specific states, such as Florida, have established laws that shield the wages of family heads from garnishment. Moreover, federal regulations safeguard certain benefits like social security or disability payments from being garnished. Nonetheless, it is crucial to recognize that this protection applies to these funds only if they can be traced back to their exempt origin once they are deposited into the debtor’s bank account. To facilitate the tracing process, individuals with outstanding judgments should keep funds derived from exempt sources separate from non-exempt funds within their bank statements.

Can a Bank Account Be Garnished Without Notice?

Indeed, it is possible for a bank account to be garnished without prior notice. There is no requirement for a judgment creditor to inform the debtor in advance of their intention to garnish the bank account. If advance notice were mandatory, debtors would have the opportunity to withdraw or transfer funds from the account before the garnishment could be executed.

Under the laws of Florida, for example, a creditor is only obligated to notify the debtor about a bank account garnishment after the garnishment has been served on the financial institution. Once the bank receives the necessary garnishment documents, it will freeze the account as per the instructions.

In summary, here are the four primary methods for opening a depositary account that offers protection against creditors:

1. Open an exempt statement, such as a joint marital account as tenants by entireties, which is exempt under Florida common law if the debt is owed by only one spouse;
2. Maintain a statement in a state that prohibits garnishment by judgment creditors;
3. Consider opening an offshore statement to add complexity and expenses to the garnishment process;
4. Keep an account exclusively for exempt funds, such as social security or pension plan distributions, which are protected under Florida or federal statutes.

When facing judgments, debtors may contemplate hiding their statements from creditors as a means of asset protection. However, attempting to conceal bank accounts is generally ineffective as a long-term strategy.

Conclusion

Creditors have multiple means at their disposal to uncover the whereabouts of a debtor’s bank statements through post-judgment discovery or discovery in aid of execution. They can compel debtors to provide sworn statements disclosing their financial accounts, available cash, and any other sources of funds. The wide array of discovery tools available to creditors greatly reduces the chances of successfully concealing a bank statement from them unless the debtor resorts to committing perjury.

Instead of attempting futile hiding tactics, debtors should focus on exploring legally viable strategies to safeguard their assets from creditors.