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How to Open a Bank Account that no Creditor can Touch?

If you wish to know how to open a bank account that your creditors cannot touch, this article is for you.

While there is no guarantee that creditors will not collect your assets once they are discovered, there are several strategies to preserve your assets.


How to Open a Bank Account that no Creditor can Touch?

There are several ways to open a bank account no creditor can touch, (1) using state laws that prohibit garnishment of bank accounts, (2) utilising an exempt bank account, (3) keeping an account with just exempt funds. (4) opening an offshore bank account.

Let’s look into each in detail –

4 Ways to Keep Creditors Out of Your Account

If you’re looking for a way to open a bank account that no creditor may touch, consider the following options:

1. Open a Bank Account to Receive Government Benefits

This option is offered to persons who receive funds exempt from garnishment. Creditors are prohibited by law from accessing these cash within a particular lookback period, which is often two months.

The following are some instances of exempt funds:

  • Social Security Disability Benefits
  • Benefits of Life Insurance
  • Benefits for Veterans
  • Unemployment Compensation
  • Benefits from Social Security
  • Pension Benefits
  • Spousal Benefits/Child Support

2. Open a Bank Account in a State where Wage Garnishment is Prohibited and Bank Levy Laws are Favourable

It is vital to select a bank with favourable bank levy regulations to avoid judgment creditors removing or freezing all of your funds from your account.

Make sure that each region, state, and country has its own set rules, so double-check the class of exempt monies your bank account comes under.

Bank accounts in states with favourable wage garnishment and bank levies protection may be necessary so that if your creditor freezes your account, all you have to do is create a new account elsewhere.

You should also bear in mind that rules differ from state to state, so check your state’s laws before opening any form of bank account.

If you learn that the chosen bank’s law doesn’t favour, you may want to search for a another bank that does.

3. Open a Commercial Bank Account for your LLC

Putting your money in a bank account under the name of a limited liability corporation is one approach to shield it from creditors. As a result, your personal funds are separated from those of your company.

When you form an LLC, you are not liable for its debts, and it is not liable for yours.

As a result, creditors can only seize the LLC’s assets for corporate debts, not for personal debts. It isn’t, however, a surefire defence against garnishment.

Even though it is a company account, an LLC account might be garnished for personal debt if you comely your personal funds with those of the firm.

4. Open a Bank Account in a Foreign Country

Opening a bank account in a different country is perhaps one of the most effective ways to protect your assets. Having a separate legal system outside of your own country makes it far more difficult for creditors to get your funds.

Your account can only be opened due to a criminal or civil inquiry. Otherwise, a creditor will have a difficult time getting access to your account. This is because local court orders are not recognised in another country.

Make that obtaining a foreign bank account is more problematic than opening a domestic bank account, owing to the extra criteria and KYC processes that must be completed.

Read Also: Debit and Credit: Definitions and Key Differences

FAQs on Bank Account

Can I Open A New Account If My Bank Account Has Been Levied?

There are no restrictions on you opening a new account if you already have one with a levy. Although you are free to open a new bank account, this will not prevent the fee from being implemented.

Is It Possible to Keep My New Bank Account From Creditors?

If your creditors win a court order requiring you to declare your bank accounts and financial details under oath, the reality is that you won’t be able to hide your bank account from them. Yes, under penalty of perjury! This means that you must provide this information truthfully, as lying constitutes perjury.

Can a Creditor Seize your Bank Account without your Permission?

Yes, a creditor can garnish a judgement debtor’s bank account without notice in most states. If a creditor was compelled to notify a debtor in advance of a judgement creditor garnishing an account, the debtor would have the option to empty the account before the garnishment.

Final Words

So, this was all about how to open a bank account that no creditor can touch.

You may protect your assets against creditors in a number of ways. Building good credit and staying on top of your debt and personal finances are the greatest ways to avoid this.