Pre-Paid Re-Loadable Debit Cards - Are they safe from judgment?

[keitheii]

I've done quit a bit of reading, and I know technically they aren't safe..... but I'm wondering in practice how many people here who have had their checking accounts frozen as a result of a judgment relied on one of these to pay bills and actually had it frozen too?

I'm in the process of filing, I probably won't have my automatic stay until the end of next week... however I have bills I need to pay now and the idea of having to purchase 5 gift cards with a $6 fee on each and splitting payments across cards just doesn't sit well with me. My understanding is that when a lawyer obtains a judgment they blanket all of the area banks with the paperwork to freeze any accounts you have, and any banks they hit where the debtor has an account they will freeze it for twice the judgment amount and notify the attorney representing the creditor. What happens after this process has been done? In my case this happened 2 weeks ago. Do they repeat this process every X days to see if you have opened a new account elsewhere? How far do they typically go?

I figure it'll be about 10 days before I get my papers to fax to my bank to unfreeze my checking account where I can resume direct deposits and pay my bills.. So my thought process is open one of those prepaid reloadable debit cards, sign my paycheck over to a friend to cash, and deposit just enough cash to cover the bills I'm going to pay electronically that day.. I'm thinking if they find out at all about this new prepaid card at all, by the time they do I'll have my automatic stay and they'll be notified of the bankruptcy filing so it won't matter. Is this reasonable thinking? Or can the find out about the new account much sooner?

I know it's a gamble, but everything I have read said it's unlikely they'd find out about the prepaid paypal card.. and since it isn't a local bank they wouldn't get a copy of the judgment they're mass-sent anyway.. Any thoughts?
(And BTW I have made sure the bank behind this particular prepaid debit card is not one I have done business with or owe money to)

[LadyInTheRed]

While I have no direct experience, from all I have heard, you are correct that it is unlikely they will find the debit card. They way the judgement creditor would find out about the card is if they force you into a debtors exam where you will have to tell them, under penalty of perjury, about all of your assets.

I think your solution will work. But, if you are going to sign your paycheck over to a friend, remember to let your attorney know about it in case it needs to be explained to the trustee at some point. You don't want it to look like you are trying to hide cash. Keep records of how you spend the check your friend cashes. And if your friend ends up holding cash in his/her account on the date you file your petition, make sure to disclose that cash as an asset.

[jacko]

I have had debit cards since 08 when I stopped paying my creditors. I chuckle when my judgement creditors are sending seizure notices to banks that I do not have accounts with including out of state ones.

[Drazil65]

We did not give the creditors a chance to seize anything, we closed any active accounts we had at the time, had our paychecks turned into "real" paper checks for a time period and we would cash them at the local Walmart and add the money (or as much as was allowed on each prepaid card) to a couple of the prepaid cards. We did this for 6 to 8 months after filing and discharge was complete (and then some just to make sure) and had no problems using the card. We also opted to send money orders (again while we were there at Walmart doing the prepaid card thing we would just get what MO we needed at same time) so no one would have any card info to trace back if they were really looking.

Was it a PITA? Yes, but we felt much safer with our paychecks and as we are in a no garnishment state we knew if someone was going to go after something it would be a freeze on our bank accounts. They can't find what you do not have, a bank account. It worked for us and then we just opened new accounts when we felt ready to. Inconvenient but better than taking the chance of having our funds frozen for any length of time. You can have your pay checks deposited directly to the cards as well but we did not use that feature.

[LadyInTheRed]

I wouldn't worry so much about opening an account after the BK is filed but before discharge*. Just make sure the judgement creditor has notice of your BK. You could even send a letter to the creditor's legal department or attorney with a copy of the notice and the proof of service showing they were served with notice and warning them that any attempt to access your accounts is a violation of the bankruptcy court's automatic stay for which you will pursue damages.

*But, that's me. Creditors don't always get their records updated quickly enough to stop the freezing of accounts. While you will be able to get a post-BK freeze removed, you would be without access to those funds for some period of time. If you use the method Drazil65 did, you will prevent any chance of that happening. Do what makes you most comfortable.

[keitheii]

While I have no direct experience, from all I have heard, you are correct that it is unlikely they will find the debit card. They way the judgement creditor would find out about the card is if they force you into a debtors exam where you will have to tell them, under penalty of perjury, about all of your assets.

I think your solution will work. But, if you are going to sign your paycheck over to a friend, remember to let your attorney know about it in case it needs to be explained to the trustee at some point. You don't want it to look like you are trying to hide cash. Keep records of how you spend the check your friend cashes. And if your friend ends up holding cash in his/her account on the date you file your petition, make sure to disclose that cash as an asset.

I'm not having her keep funds in her account, I don't want to drag her into my mess.. I'm just cashing my check against her account and depositing it into a prepaid debit card. I'm just concerned if doing that on a reloadable card registered to my social will be found by the creditor who had a judgment against me. I'm just wondering if anyone had a reloadable prepaid card frozen before. As it happens my plans might change slightly since to my surprise I found out I can't pay my car payment or utilities with a credit or debit card! They only take ebt from accounts with routing numbers... What a PITA

[keitheii]

I wouldn't worry so much about opening an account after the BK is filed but before discharge*. Just make sure the judgement creditor has notice of your BK. You could even send a letter to the creditor's legal department or attorney with a copy of the notice and the proof of service showing they were served with notice and warning them that any attempt to access your accounts is a violation of the bankruptcy court's automatic stay for which you will pursue damages.

*But, that's me. Creditors don't always get their records updated quickly enough to stop the freezing of accounts. While you will be able to get a post-BK freeze removed, you would be without access to those funds for some period of time. If you use the method Drazil65 did, you will prevent any chance of that happening. Do what makes you most comfortable.

That's the concern, I haven't filed yet.. I've already paid the lawyer and he's doing the paperwork which I expect to sign Tuesday and then they'll file them, in the meantime I have utilities, rent, car payments and other things I depend on my debit card to pay.. So I got the prepaid Reloadable card for now.. Hoping that wasn't a bad idea on my part.