Filing For Bankruptcy To Prevent Account Seizure
No one wants the feeling of dread that accompanies worrying about an account being emptied. If you have a judgment against you and can’t afford to pay, filing for bankruptcy could be an excellent way to goespecially if the debt is a type you can erase.
For instance, Chapter 7 works well for personal loans, medical bills, and most credit card balances. If you qualify, you’ll be able to wipe out the debt in about four months. Better yet, you won’t need to make any monthly payments.
Keep in mind, however, that you can’t eliminate all debts in bankruptcy. For instance, priority debts aren’t dischargeable. Examples of priority debts include domestic support obligations and some income tax arrearages. Even so, wiping out other commitments, such as credit card debt, frees up income filers can use toward debts they’re stuck paying.
If you have debt that won’t go away in bankruptcy, you might be better off filing for Chapter 13. Chapter 13 allows filers to repay nondischargeable debt over a three- to five-year repayment plan. Filers who want to avoid a wage garnishment find that they can do so using Chapter 13. You can also discharge more debt in Chapter 13 than Chapter 7.
Re: Garnishment Laws Due To Credit Card Debt
Quoting Delaware Code § 4913. Exemption and attachment of wages. Eighty-five percent of the amount of the wages for labor or service of any person residing within the State shall be exempt from mesne attachment process and execution attachment process under the laws of this State; but such limitation shall be inapplicable to process issued for the collection of a fine or costs or taxes due and owing the State. On any amount of wages due, only 1 attachment may be made. Any creditor causing such attachment to be made shall have the benefit of priority until the judgment with costs for which the attachment was made has been paid in full. Wages shall include salaries, commissions and every other form of remuneration paid to an employee by an employer for labor or services, but shall not include payment made for services rendered by a person who is self-employed.I would interpret that language as meaning that if you’re self-employed a creditor cannot seek to garnish your compensation from your clients. If you are an incorporated entity employing yourself, you would be paying yourself wages that can be garnished – you and the incorporated entity are separate legal individuals.I see the claim on one of your sites that ‘bank accounts cannot be garnished’, but I don’t see a statute to that effect , and I do see at least one statute that suggests otherwise What statute are you looking at?
Special Rules Regarding Bank Accounts
Be careful about depositing funds that cant be garnished into the same account as funds that can be garnished. Funds that cant be garnished should be segregated because they will lose their protection if they are commingled with other funds once deposited into the bank account. Say you receive social security, and you also have a part time job, and you have both checks deposited into the same checking account. If a creditor serves a bank levy on your checking account, courts generally find that once the funds are mixed together in the same account, the exempt funds are no longer exempt from attachment unless you can prove that the only funds in the account at the time of the bank levy notice are exempt funds. If you find yourself in this situation, it is much simpler and safer to simply maintain segregated accounts.
Questions for Your Attorney Is my income subject to garnishment? How much can a creditor garnish? Does filing for bankruptcy make sense in my case?
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How Long Does It Take To Unfreeze A Bank Account
There are many reasons why a debtor may claim exemption from garnishment of money in a bank account, including for example, accounts holding retirement funds, social security, or entireties accounts in the case of married debtor.
Most states provide that money from an exempt asset retains its exemption after the money is deposited in the debtors bank accounts. The debtor must claim and prove their exemptions in court. The legal process typically last;at least a month, but could go on for two months or longer;if the creditor fights the claim of exemption.
What You Can Do To Protect Your Bank Account From Creditors
Having a creditor freeze your bank account or place a garnishment on your paycheck is by no means a pleasant experience and can be very stressful for many people. Luckily, you can take some steps to limit the damage and make sure that you stay afloat.
The most important thing here is to act fast to secure your money while ensuring you come up with a repayment plan. Keep in mind that creditors are more interested in getting paid than see you endure financial hardship.
Even so, its crucial to make sure that you improve your financial situation. From better budgeting to supplementing your income, there are many things you can do to make sure that you emerge out of this stronger and better equipped to tackle whatever challenges come your way.
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Rules Regarding Foreign Bank Accounts
A bank is only obligated to comply with a freeze order if the judge who orders the freeze has legal jurisdiction over the banks actions. Offshore banks banks headquartered in foreign countries are not obligated to comply with freeze orders issued by U.S. judges, as U.S. law does not apply to other countries. So, certain accounts held with foreign banks cannot be frozen.
Option : Exempt Bank Accounts
Some bank accounts may be exempt from garnishment under applicable state laws. For example, 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. The accounts are not exempt from creditors of both spouses, however.
A debtor does not have to reside in Florida to maintain an exempt entireties account at a Florida bank. Florida law exempts entireties accounts in the state regardless of where the owner resides. Beware that there are several legal technical requirements to open an exempt entireties account at many banks that do not offer an entireties option on the account application. Its best to find a local Florida bank that expressly provides tenants by entireties accounts and where the entireties designation is expressed on the signature card and on monthly statements.
Understand that if a creditor serves a writ of garnishment on a bank where the debtor maintains an exempt tenants by entireties accounts the bank will still freeze the account. The debtor 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 during the time the debtor is attempting to dissolve a garnishment writ through court proceedings.
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How Can I Tell If My Account Can Be Garnished
Some property cannot legally be taken by creditors to pay a debt. Property that cannot be legally taken to pay a debt is called exempt. If your bank account only includes income that is exempt, then your account cannot be garnished.Your Social Security is exempt. So, if the only income going into your bank account is your Social Security check, then most creditors cannot garnish it.
If your only monthly income is Social Security, it would be wise to send an anti-garnishment letter to your bank. If your Social Security is electronically deposited into your bank account, then the bank should automatically look at what exempted amount was deposited within thepast 2 months and allow you, the account holder, full access to that amount. Even if the exempt funds are mixed with other funds in the bank account, the bank has the responsibility to protect the full amount that is exempt. Also, it does not make a difference whether there is a co-owner on the account. However, it is best to keep your Social Security in an account by itself.
How To Protect Exempt Bank Account Funds Proactively
At the hearing, the judge will review the paperwork to ensure that the funds are exempt, which might prove difficult if you’ve commingled them with other money in the same account. Here are some tips that will help you maintain the exempt status of your funds.
- Direct deposit. It will be easier for you to verify an exemption if the government deposits the funds directly into your account, and your bank must protect two months of exempt fund deposits.
- Exclusive account. The best way to get around a commingling problem is not to commingle the funds in the first place. Keep protected funds in a dedicated account. Use a separate bank account for nonexempt funds.
- Cash checks. If you know that a creditor has a judgment against you and you don’t want to worry about losing your money, don’t put the funds in a bank account. A creditor can’t get what isn’t there.
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How To Open A Bank Account That No Creditor Can Touch
There are two options to opening a bank account that no creditor can touch: using an exempt bank accounts or using state laws that prohibit bank garnishments. First, exempt bank accounts include accounts owed as tenants by entireties or accounts that include only exempt funds, such as social security deposits. Second, some states have laws that prohibit a judgment creditor from garnishing banks within the state completely, regardless of the source of the funds in the account.
Example Of How To Structure An Account That Creditors Can’t Get Access Too
There are many different types of structures that can be used in order to create a bulletproof asset protection structure.
Having a business account that is opened by an LLC which is owned by an offshore asset protection trust is a very effective structure these days. We often recommend using a Cook Islands Trust together with a Nevis LLC and corporate account. In this example, the offshore trust will own the LLC and the business bank account that is opened. Because the account is opened by the business and is not a personal account there is a legal separation of powers which effectively creates a second separate legal entity whereby your direct hold over the account is diminished.
This type of arrangement makes it much more difficult for creditors access to your funds. It is important that you consult a professional to establish the offshore structure for you. If done incorrectly it could make it easier for creditors to get access.;
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Garnishment Procedure In District Court
Note: the following processes are based on District Court Rules of Procedure. They apply if you have a judgment in the District Court of Maryland. See Md. Rules Title 3, Chapter 600. The rules for garnishing property in Circuit Court are very similar, however, there may be some differences. See Md. Rules Title 2, Chapter 600.;Notably, the Circuit Court does not have forms for judgment creditors to use. Some Circuit Courts may allow you to use District Court forms. Others may require you to draft your own motions and requests. If you have questions about court procedure, talk to a lawyer.;;
Read the Rules:;;;
The creditor begins the garnishment process by filing a Request with the court. There is a fee to file the Request. After the Request is filed, the court clerk or a judge signs the Request and it becomes a Writ of Garnishment. A writ is a formal command ordering a person or entity to take some action. A Writ of Garnishment is a court order to the garnishee. It orders the garnishee to hold any property of the judgment debtor that the garnishee possesses at the time the Writ is filed.
The Writ of Garnishment must be served on the garnishee via certified mail, restricted delivery, private process or sheriff/constable. For more information on service of process see;Frequently Asked Questions about “Service of Process in Maryland.
Read the Rule:;Md. Rule 3-645;
Responses To Congratulations On Your Oregon Judgment Now What
Hi there i am going threw a small claims judgement now. Just payed the sherifs office to serve him yesterday. I am looking gor some help.
NACM Customer Service
Hi Vernon,You can contact our office and we can connect you with one of our collectors who can help you answer your questions. Toll-Free: 800.622.6985
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If My Bank Account Is Levied Can I Open A New Account
Yes. As long as you meet the requirements of the bank where you want to open the account, there should not be a problem about opening a new bank account. However, just because its a new bank account does not guarantee that creditors will not find it, ask the courts for you to disclose your new bank information, and levy it again.
File And Serve The Application
File the application;in the relevant court registry location nearest to where you live:;
Under the;law in BC, a court;can;release;a garnishing order without telling the creditor it has done so. Still, its usually best to;serve the application;on the other party.
You can serve the application in various ways, such as leaving a copy with the other party or sending it by snail mail to the other partys address. Check the service rules of;Small Claims Court;or;Supreme Court;for more details.;
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Some Types Of Benefits Are Protected
Under the;law in BC, income assistance received by a debtor cannot be garnished. Other types of government benefits are also exempt from garnishment by;non-government;creditors, including:
Canada Pension Plan payments
Old Age Security pension payments
Guaranteed Income Supplement payments
However, most government benefits;can;be garnished by government bodies such as the Canada Revenue Agency. Money garnished by the government doesnt get paid into court. Instead, it goes directly to the government body.
If you’ve already deposited your benefit payments
In some cases, benefit payments may be exempt even after theyre deposited to your bank account. However, the law in this area is evolving. Consider seeking legal advice if this applies to you.;
How To Hide Bank Accounts From Creditors
Judgment debtors;sometimes want to know how to hide money from creditors. But hiding a bank account from creditors is never an effective asset protection strategy.
Judgment creditors can find where a debtor maintains bank accounts by using post-judgment discovery, or discovery in aid of execution. Post-judgment discovery refers to the creditor collection tools that allow a creditor to find out where the debtor holds assets that are available to satisfy a judgment. A creditor has several methods of forcing a debtor to answer questions under oath about the debtors financial accounts, cash on hand, and any other source of money that the debtor has available. These methods prevent a debtor from effectively hiding a bank account from creditors, other than lying under oath. Some creditor discovery tools include:
- oral deposition of the debtor under oath
- requests to produce accounting statements and other financial documents
- Floridas standard;fact information sheet
- examination of the debtors federal tax returns that show bank interest income
Using a combination of these discovery methods, a creditor may identify all of a debtors financial accounts wherever located or identify any person or company owning financial accounts on the debtors behalf.
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How Does A Creditor Ask For A Payment Hearing
If you are a creditor , you must complete a summons to a payment hearing form and mail it or bring it to the court registry for filing. The summons form is available for downloading and completing online .
After the summons is accepted for filing, the registry will provide a date and time for the hearing. The registry will also indicate on the summons how you and the debtor will be attending. You will have to personally serve or arrange for someone else to personally serve the person who is to come to the hearing. Service by mail is not permitted. The notice must be served; in accordance with Rule 12 and cannot be served outside of British Columbia. The court can make an order for substituted service of a summons to a payment hearing, if the judge is satisfied that the debtor is avoiding the court process.
If the debtor is a company, you will want the summons to name the person who has the information you need. You can name any director, officer or employee of the company. If the debtor is a partnership you can name any partner. Once the summons has been served, the affidavit of service should be completed and be sworn so that it is ready to be shown to the judge if the debtor does not appear.
When Your Earnings Or Bank Account Are Garnisheed
The topics in the Dial-A-Law series provide general information on legal issues within the Province of Alberta. The purpose of this topic is to inform you of your legal rights and responsibilities. This is not legal advice. If you require legal advice, you should contact a lawyer.
This topic discusses the garnishee of your earnings or bank account.
If you owe a person money and you do not pay, that creditor may take you to court and obtain a judgment for the debt. The creditor may enforce the judgment for debt by garnishee or seizure of your property. The creditor must obtain a judgment from the court before any enforcement action can be taken. The creditor will need to file a Writ of Enforcement and register the Writ with the Personal Property Registry. All creditors with registered writs will share in money collected when you have been garnished.
If you are trying to hide assets, leave the province or are behind in your maintenance payments, you could be garnished prior to judgment and before the creditor has gone to Court to get the Garnishee Summons.
You may not receive official notice about the garnishee until fifteen days after the Garnishee Summons has been served. You will probably find out sooner when your earnings are reduced or your bank account balance is less than expected.
Dial-A-Law is a Calgary Legal Guidance public service project funded in part by the Alberta Law Foundation.
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