More ideas to prevent bank account garnishment

[VirginiaGuy]

On some recent threads, the topic of prepaid cards came up as a way of keeping your assets out of a bank account when a creditor is looking to sue you and is only one judgment away from being able to levy your bank account. Here are a few other ideas I didn't see a lot of discussion about. Let me know what you think.

Paypal: You can keep a great deal of money in your Paypal account as far as I know and it's not really a bank account. Doesn't mean creditors couldn't force you to list it, but not as easy to find as a bank account.

AAA TravelMoney: AAA now has a prepaid debit card for travelers. No monthly fee and you can load for free at participating AAA locations. As long as you use it for debit every few months there's no charge. I think small charges for ATM use apply. Can hold nearly 10k. Trouble is I don't know who backs the card. Could be a bank, which could create other problems. If anyone has any info, let us know.

Western Union prepaid card: This one can hold 5k and accepts direct deposit. Bank that backs it is located in the middle of nowhere.

[catleg]

Just bank way the heck out of state with an online bank. For example, ING Direct, E Trade Bank, Metlife Bank, Perkstreet (who the heck has ever heard of perkstreet?). You get the idea.

[epiphany]

You need to have your paypal account linked to a bank account or credit card in order to get one. Simple to trace and not the hidden grail you are looking for.


ep

[frogger]

You need to have your paypal account linked to a bank account or credit card in order to get one. Simple to trace and not the hidden grail you are looking for.


ep

Indeed. Paypal is pretty easy.

[WhatMoney]

Indeed. Paypal is pretty easy.

Has anyone ever heard of a PayPal account being frozen and levied anywhere anytime on the Internet? I'm not talking about buyer/seller disputes that can cause a funds freeze, but PayPal responding to a court ordered garnishment order for one of their standard customers.

PayPal does not need your SSN to open an account. You use an out-of-state small obscure bank and only link to a bank savings account at that out-of-state bank, which has no check writing because it is a savings account. The out of state bank does not report to Chexsystems because no checks are involved, and it also does not do a hard pull on your credit report.

If PayPal is so easy, where are all the levy reports from angry consumers?

[treehugger1]

I've never heard of a PayPal account being frozen or seized due to a debt judgment. And, I doubt there is very little legal clout that allows judgment creditors/CA/JDB's to get to any prepaid/holding accounts; paypal being one of these.

[VirginiaGuy]

PayPal is probably safe from creditors but it's risky for other reasons. Google PayPal complaints. There are people who have had their accounts hacked into and all their money taken, and people who have their accounts frozen for "suspicious activity." But prepaid cards are generally a good deal to make your assets more difficult for creditors to find and levy. Creditors like to go for the low hanging fruit, and that's the guy or gal who keeps 10k dollars in his or her bank account down the street from the sheriff's office :-)

[BigJohn]

I've never heard of a PayPal account being frozen or seized due to a debt judgment. And, I doubt there is very little legal clout that allows judgment creditors/CA/JDB's to get to any prepaid/holding accounts; paypal being one of these.

If the IRS gets involved, the ask for paypal accounts. They are sneaky. They first ask for your websites and from there gleen the rest of the information.

[treehugger1]

Big John, Comments noted. However, the concern here is not with the IRS, but I agree that the IRS leaves no stone un-turned. LOL. I am currently working through some past issues with the IRS and, yep, they are thorough! On the other hand, I have found that the IRS is very, very, very careful about protecting private information you share with them.

[epiphany]

Hmmm, okay, well I poked around and couldn't find an instance of a creditor seizing a paypal account (but I did find one seized by a bankruptcy trustee). However, I still think paypal accounts would be easy to locate in many cases. Especially if they have the email address tied to the paypal account. I can ascertain whether an email address is tied to a paypal account by partially filling out a money request (meaning I don't actually have to send it).

Not sure why creditors are not actively pursuing these accounts...maybe it would be more difficult than seizing a bank account? Paypal is not considered a financial institution, but a money transfer service.

ep