Creditors Locating Your Bank Account

[spearmint]

How is it that creditors manage to find one's bank account?

I just got a phone call from a rather angry friend of mine. It turns out he owes a credit union a few dollars and now they have located is bank account at another bank (don't know which one) and they are trying to garnish it.

Does anyone know how they can locate your current bank account?

I thought perhaps it was because he filed taxes in April but that would only give them his present address (I think).

[justbroke]

Easy... just use that other account to have paid them before.

[spearmint]

Easy... just use that other account to have paid them before.

Well, the creditor is a bank. He had a loan with them that didn't get paid. Now they have located his current bank and he is really worried.

He hasn't made any payments to the old bank for them to be able to locate his new bank so I don't know how they found his present bank account.

He has not used that credit union in about 5 years.

[WhatMoney]

How is it that creditors manage to find one's bank account?

Does anyone know how they can locate your current bank account?

First, he had to have had a judgment against him from the credit union for not paying his bills to that bank. Armed with a judgment it is easy for anyone, especially another financial institution to discover where else you bank.

His new bank account was probably listed in ChexSystems and other check monitoring companies when he opened the account or ordered checks. It could also be listed in any of his credit reports as an inquiry for any credit check done by the bank when he opened a new account. Banks have access to all these services and use them every day. If they wanted to get curious they could subpoena his landlord or mortgage company or utility company and request a copy of the checks or online account he used to make a payment.

All they need to know is the bank name. A bank garnishment order only needs the debtor's name and address, not even the social security number. So once they know which bank has reported him when he opened the account, the bank will run a search for the judgment holder and find all accounts and safety deposit boxes with that bank at any branch in the country.

He should have used an out of state debit card without checking for his deposits - these are more difficult to find.

[justbroke]

His new bank account was probably listed in ChexSystems and other check monitoring companies when he opened the account or ordered checks.

Exactly!

[spearmint]

He should have used an out of state debit card without checking for his deposits - these are more difficult to find.

Okay, how can you get an out of state account with debit card but without checking account then?

[justbroke]

You can't. Debit cards are "check" products and are treated partially under the regulations for checking accounts and partially under the regulations for a credit card. Federal regulations are must more lax on checking accounts than savings accounts. I don't think there is any bank that would allow a "debit" card to be used against a savings account.

Remember, that savings account up until very recently were still "passbook" savings and there was a reason for that. Sure, we have eSavings accounts now, but most of the traditional rules still apply.

[ryan]

There are services out there that do 'bank locates' and 'employer locates'.

For a fee, usually between $50 and $150 they will locate the bank account for the creditor. Another way is that the creditor (once they have the judgment) will simply serve garnishment orders on all the banks in a town they are likely to believe the debtor has an account in.

They sometimes do the 'locates' even before they sue to see how difficult its going to be to enforce the judgment. For instance, if they can't find an employer, they may not even file suit. But not always.

[MSbklawyer]

Okay, how can you get an out of state account with debit card but without checking account then?

http://www.caymannational.com/

[spearmint]

http://www.caymannational.com/

Are you saying that creditors who have a judgement cannot collect from accounts in the Cayman Islands? Aren't the Cayman Islands a U.S. territory, though?

[spearmint]

There are services out there that do 'bank locates' and 'employer locates'.

For a fee, usually between $50 and $150 they will locate the bank account for the creditor. Another way is that the creditor (once they have the judgment) will simply serve garnishment orders on all the banks in a town they are likely to believe the debtor has an account in.

They sometimes do the 'locates' even before they sue to see how difficult its going to be to enforce the judgment. For instance, if they can't find an employer, they may not even file suit. But not always.

Out of curiosity, how do they find out where someone works?

[WhatMoney]

Are you saying that creditors who have a judgement cannot collect from accounts in the Cayman Islands? Aren't the Cayman Islands a U.S. territory, though?

The Cayman Islands is a British Overseas Territory. Has nothing to do with the USA.

To sue you in Cayman Islands they would need to first find your account out of the 500 or so Cayman banks and Trust companies, and then hire a Cayman attorney to sue you in a Cayman court.

http://www.caymanbankingservices.com..._accounts.html

And there is also this Sticky Thread, for information purposes only

http://www.bkforum.com/showthread.php?t=12810

[frogger]

There are services out there that do 'bank locates' and 'employer locates'.

For a fee, usually between $50 and $150 they will locate the bank account for the creditor.

It's a lot cheaper than that for companies that are in the business of collections.

[spearmint]

The Cayman Islands is a British Overseas Territory. Has nothing to do with the USA.

To sue you in Cayman Islands they would need to first find your account out of the 500 or so Cayman banks and Trust companies, and then hire a Cayman attorney to sue you in a Cayman court.

http://www.caymanbankingservices.com..._accounts.html

And there is also this Sticky Thread, for information purposes only

http://www.bkforum.com/showthread.php?t=12810

I like it! And that other thread about how the rich protect assets is very interesting. This is helpful not only to my friend but perhaps to me, too.

One thought, though. If you have salary directly deposited into a Cayman Islands account, could they not find out through employer records? Or, would it make no difference if they did?

Now that we've got assets covered, are there any ways to stop wages being garnished?

Also, what portion of wages are up for garnishment in each state?

[HHM]

The only way to not have wages garnished with any sense of legality (aside from having your employer pay you under the table, not legal) is this...But, Note, this option only works in very limited number of fields because of IRS regulations.

1. Debtor sets up an LLC.
2. Debtor's LLC contracts with the employer.
3. Employer pays LLC
4. Debtor pays himself through the LLC.

However, this only works if the type of services you are rendering the employer can meet the IRS standards for being an independent contractor.

However, 99% of the time, these steps are NOT necessary. 99% of the people that would even consider such moves should simply file BK, far more cost effective in the long run and way less stressful.