How to Prevent Lump Sum Gi Bill Payment from being Garnished

[Scarlett1234]

I made some mistakes and got into lots of credit card debt. Most are charged off. Some are with OC. Some are with CA. I am about to receive a lump sum payment from VA for the past few months GI Bill BAH. I have plans to use this money to settle most of the debt. But I can' stop worrying. Would the creditor and CA see that money through Chex Systems as soon as I receive it? Then they might try to garnish it? Then I won't have access to that money that I will use to settle the debt. Can I transfer this money to my significant other's account to protect it till I use it?
I believe I am judgment proof. I don't have a job.
I am not sure if gi bill BAH is exempted from garnishment or not?
Can anyone share your insight, please?
Thanks.

[shipo]

Unless your creditors already have judgements against you or unless they are already in court working toward that end, they cannot garnish. As far as I know, only the IRS can garnish money from your bank account without a court order.

[Scarlett1234]

Thank you for your reply. I realized I may not have used the right word. I remember some posts here said many people woke up and realized their bank account has been levied and frozen?
Do you know will the creditor be able to see I received a lump sum money instantly at a bank different than the creditor or they can't see it until a month later? Can they just levy my account overnight?

[flashoflight]

It depends on the financial institution. If your bank can use Zelle above a $500 daily limit, the creditors might have access to your bank's transaction data since the company that runs Zelle sells all banking data. If your bank account was used for the creditor's payments in the past, you can expect them to try a bank levy after a judgment on that account for sure. If you are hard to find with no forwarding address for the process server, they might have a default judgment on you already with substitute service and you may have your bank account levied overnight with no notice. Because of the way garnishment works in most states, they can't time it reliably so it will be dumb luck if your account has zero or is full of unspent lump sum money. Yes, your money is not safe in ANY financial institution because you may unknowingly already have a default judgment. Only a true prepaid account or cash is safe. Lots of prepaid-like accounts such as Chime are not safe.

[justbroke]

[I moved this from a duplicated topic in another forum area. Please refrain from creating duplicate questions as they dilute the responses.]

I wish I had an answer for that. Generally, no VA benefit is subject to garnishment except under certain circumstances (usually family-law or tax related).

This does not mean that VA benefits, or any otherwise protected funds for that matter, sitting in an account won't be "subjected" to an attempted garnishment by a creditor, court, or governmental agency. The garnisher (creditor) would need to be informed that all the money in that account are protected and that the debtor can prove that there is no commingling with other non-protected funds.

If you are about to receive any protected benefit in a lump sum, it is "probably" best to transfer for it to an account which only has those proceeds. That way you can easily identify and show that the funds are protected and that there is no commingling with other non-protected funds.