debt collection in Texas & direct deposit to a prepaid card

[drowning75]

My question is can a creditor "freeze" a prepaid debt card that has direct deposit going to it. These are the ones you see in ads where no bank account is required. I am in Texas. Thank you for your responses.

[treehugger1]

It is unlikely that the "bank" insuring the prepaid debit card can be easily found without a debtor exam. The prepaid debit cards are simply 16 digit MC or VISA account numbers tied to a routing number and account number that links the card to some bank, of which you are probbaly not a direct customer. You will note that almost all of the dozens of prepaid cards on the market specifically state that your account is "not a bank account." I'm not sure why they make this disclaimer other than the account is not legally considered a "bank account" under federal or state laws. On the other hand, all the good prepaid debit cards are FDIC insured. So, a bank is involved somewhere, but you do not directly have an account with the bank that supports the private pre-paid card. That's my take on this. I think the actual bank account is very difficult for anyone to uncover, but if so, I would think the funds are subject to seizure. Yet, your name is tied to the prepaid debit account. The bank supporting the account is secondary in that your signed contract is with the card issuer, not the bank which is a separate financial entity. I don't quite understand the distinction, but I have several prepaid debit accounts, and my legal obligation is with the card issuer, not whatever bank supports the card. I would guess that the issuer (Walmart, Netspend, Western Union, etc) assumes the responsibility of any screwups, overcharges, etc that occur with your use of the card. Its a bit of a mystery for the least-sophisticated consumer.

Again, I'm just stating my own personal take on pre-paid cards. I am not an attorney who could sort out the issue of whether the card is "garnishable" or not. I do know that the pre-paid VISA/MC card business is steadily growing and for folks who need direct deposit without direct access to a bank account such cards are a reasonable compromise.

[junker]

i was told by B of A , that the way judgement creditors get a hold of your banking info is through the ss# if you dont use your ss# on a prepaid card i dont see how they could find it. i was on my roommates checking acct as authorized signer, and they told me they could sieze her acct, for my judgement because of my ss# on her acct. i then became her power of attorney and they removed my ss# and can still sign checks, but they said nothing can be seized because my number was removed. they also said if you use their bill pay system. your personal checking info doesnt go to creditor.bills are paid showing from b of a acct, but not your own. so creditors cannot access your info. i had to learn this the hard way.

[drowning75]

Looks like these direct deposit to a prepaid card all require identification which requires a SSN. It is a new federal law that requires identification "war on terrorism" So with that said even though this is not a bank account technically. I still wonder if a debt collector could find this account and "freeze" or "seize" due to a judgement.

[treehugger1]

Do people honestly believe that there is some giant database out there that is available to CA's and creditors that lists your SSN and financial/bank/stocks and is readily available and easily accessible? My ex worked for years at a large banking firm and when I asked her this question a few months ago, she laughed and said, "That would be nice."

This is not to say that under the anti-terrorist rules a database doesn't exist, but I'm inclined to believe it is not easily accessible to anyone without a true security interest.

Back to your concerns. I would suspect that a judgment creditor/CA can potentially seize a pre-paid account. If you worry is due to the fact that your employer requires a direct deposit, then have your check direct deposited and as soon as possible withdraw all the funds at $500 a time (plus whatever the ATm fees are.) Then you can go down to walmart, riteaid, etc and just buy over the counter prepaid debit cards. I think this would be a pain.

[junker]

when i did talk to creditor holding my judgement, first thing he wanted was my bank, he said it takes about 2 weeks to seize your acct. he also stated they do blanket searches in area you live for local banks.and can find you that way. i imagine to verify acct they need your ss#. on that acct. i knew a private investigator that paid a monthly fee to a data base, and could find any info on anyone in five minutes.especially with ss# . also with op, i would be concerned they go to employer for garnishment, rather than prepaid card. i had asked a similar question on debit card for social security a while back on this site, and the overwhelming answer was no, they could not seize it.

[Noodle Mama]

There is no wage garnishment in Texas for regular ole' creditors. The IRS, or the Feds can garnish wages, but not creditors, no matter how much you owe.

Also, when you do get wages garnished, its done at the payroll level. The HR person will be the one actually deducting funds. The only people who can actually freeze a bank account are (once again) the Feds and the IRS.

[treehugger1]

BB, I don't think LN/Choicepoint/Accurint has all the information one might think. However, one can always get a copy of their LN report here:

http://www.lexisnexis.com/privacy/for-consumers/request-personal-information.aspx

At the very least, one gets some sense of what compiled info is available.