Friday, August 15, 2014

Q&A: Can I Open an Account in Another State to Avoid Collector's Bank Levy?

I have a question. I am trying to resolve my credit issues and recently my account was levied by a debt collector. Can I open an account in other State and avoid this levy again.Will they find the bank.How can the collectors get the info.



Unless the collector is collecting a government debt, such as a defaulted student loan or unpaid taxes, the company must have a civil judgment against you before it can levy your bank account. The right and proper way to stop a bank levy is to successfully contest the judgment that created the levy in the first place. You don't mention which state you're in, but state laws vary on how long you have to contest a judgment after its filed.

If you're still within the time frame to contest the judgment, you'll need to have grounds to do so. Once again, acceptable grounds for this will vary by state, but in general you can contest a judgment for the following reasons:

  • The original debt doesn't belong to you
  • You had a death in the family, were hospitalized or have another valid reason for missing court. 
  • You were never notified of the lawsuit (improper service) and therefore couldn't defend yourself
  • Clerical errors in the judgment paperwork
  • The statute of limitations in your state expired before the lawsuit was filed

Of course, getting rid of the judgment isn't always an option. In that case, you have the legal right to open up a new bank account in another state, but there's no guarantee the debt collector isn't going to find it. Out-of-state and online banks are also subject to a collection agency's levy--but only if the debt collector knows where you bank.

Let's say you hypothetically stop using your current bank account and open a new one. It isn't going to take long for the debt collector to realize you've stopped depositing money into your account and have probably switched banks. If the debt collector can figure out where you're banking, it can simply serve the new bank with a writ of execution and levy the new account. If it can't figure out where you bank, it can get the information via a post-judgment interrogatory.

If the debt collector petitions the court for a post-judgment interrogatory, you'll be called back into court and forced to disclose the location of your hidden assets. In this case, they'll simply force you to tell them where you're banking. If you refuse, you could be charged with contempt and possibly even face jail time.

The collection agency could also decide that, if it can't get the money from your bank account, it will get the money by garnishing your paycheck. Unless you live in South Carolina, a debt collector with a judgment has the right to garnish a certain percentage of your paycheck. All the collector needs to know is where you work, and that's a lot easier to figure out than where you bank. Judgment creditors may also have the right to seize other assets, such as investments, and certain forms of property--depending, of course, on your state's judgment enforcement laws.

As far as your question about how collectors get their information goes, they can get information about you a variety of different ways. A post-judgment interrogatory provides the debt collector with whatever information it needs. Your credit report contains valuable information about you, such as your address, Social Security number, whether you're paying other creditors on time and, sometimes, your employer. Collection agencies have also been known to stalk debtor's social media profiles for information. If a collection agency can't find you, federal law says it can call your loved ones and ask for your location.And, of course, who could forget the age-old process of skip-tracing? You'd be surprised how easy it is for a collection agency to gather information about you.

Legally, I am not allowed to tell you how to avoid paying a judgment because I can't give a debtor advice on how to commit fraud. What I can tell you, however, is that a good attorney is worth his/her weight in gold here. Legal help is pricey, but hiring a lawyer is probably a heck of a lot cheaper than continuing to allow the debt collector to levy your bank account.

Hiring an attorney may be beneficial but it isn't a requirement. If you have valid grounds to contest the judgment but can't afford an attorney, you can file a motion with the court on your own. Just make sure that you read up on the legal process and your state's specific rules and procedures. You may also qualify for legal aid, depending on your location and your income.

Oh, one more thing: certain forms of income are exempt from garnishment. If you have exempt income in your bank account, the debt collector may seize it anyway unless you fill out an exemption form from your bank and officially declare the funds exempt. See Funds Exempt from Garnishment for more information on which forms of income are exempt and how to declare your exemptions in order to legally escape your bank levy.

Best of Luck,


  1. Thanks for your precise info. I was not served properly and probably can overturn the judgement but what will be my option then. Also how long the judgement can last for enforcement. I live in New York.
    Thanks again Lee.

    1. I am going to provide you with the URL for a page within the Neighborhood Economic Development Advocacy Project's website. This specific page gives very thorough information regarding overturning a judgment in New York.

      The enforcement period for judgments in New York is 20 years. If the creditor uses the judgment to attach a lien to any real estate you own, the real estate lien expires after only 10 years. If you reach the end of the enforcement period and still have not paid the judgment, the creditor can renew it for an additional 10 years provided it does so before the original judgment expires. After it expires, the creditor loses its ability to do things like garnish wages, attach liens, seize assets and levy bank accounts.

      Please copy and paste the link below into your browser window.

    2. Thanks Lee! I also asked a question about a business account. Can a business account ( corporate account) be levied. How does that work. Thanks

    3. Y, I apologize. This was the only email from you in my inbox. The only change I made was removing your last name to protect your privacy.

      I may or may not be able to answer the question as it applies to the business because that falls under a different branch of the law. Plus, I'd need a lot more information, such as the state you live in, the state the business is located in, how the business is legally classified, whether you own the business or merely have access to a spending account as an employee, whether the business owes a debt or you're referring to a personal debt that you owe separately from the business.

      If you're worried about your corporate spending account with your employer, you're probably safe. Although you have access to the account, it doesn't belong to you. It belongs to the business. If the account in question is a business account for a business you own that is in your name, you may have issues, depending on the factors I listed above.

      I wish I could be of more help with that one.

  2. Thanks Lee!
    I have asked a question about the business corporate account. I have a personal credit card debt and a default judgement as well against two accounts but this for my personal account. If the business be sued? Business is S corp in New York. Business has no debt. My personal finances are separate from it. Can the business account be levied for personal credit card debt.. thanks

    1. To the best of my knowledge, if you used your personal credit to open the business, your Social Security number is attached to the business and any business assets can be considered personal assets. Thus, any judgment against you can result in business assets being seized.

      If you did not use your own credit history as a basis to take out the loan that built the business in the first place, you're probably in the clear. For example, if you built the business using your own savings or a non-credit-based loan from a family member, you may be in the clear.

      But I'm not positive. Like I mentioned before, business credit isn't my field of expertise. I strongly recommend that you meet with an attorney in your area to determine what your business' financial liability would be, if any, should a judgment creditor goes after your assets