Can my business bank account be levied for collection on credit card debt?
have two large outstanding credit card debts we can't afford to pay due to drop in business..
If a credit card compnay or collection agent gets a judgement against me...can they garnish our business checking account..or only ones in our personal names?
—david
Short answer
A business bank account can be levied over a personal credit card judgment if the account is a DBA in your name with your Social Security number attached. How the account was opened is what decides your exposure.
Key points on this page
- Many small business owners use personal credit cards to get through slow periods, which leaves the debt in their own name
- Credit card judgments against you personally put you at risk of property lien, wage garnishment and bank account levy
- A levy against a business account is possible where the account is a DBA in your name and your Social Security number is attached to it
- Whether the account was opened with an EIN or your Social Security number, and how the business is structured, are what determine the risk
Many small business owners use personal credit cards to get through slow periods. If you have credit card judgments against you personally, you are at risk of property lien, wage garnishment, and bank account levy.
For more detailed information on this topic, see this article.
A bank account levy against a business account is possible if the account is a DBA “your name” or something like that, and where your SS# is attached etc.
When you set up the account was it with an EIN # or your social?
How is the business structured, C or S corp, LLC, partnership, other?
Can you provide more information about the current status of your unpaid credit card debts, who you owe, the balances, who is now collecting, have you been sued, is there a judgment currently?
What state do you live in?
If you answer these questions in a comment reply below I can provide more than just general feedback.
About Michael BoveeMichael started CRN in 2004 with a mission to provide people in need with detailed debt and credit help and education. Michael has participated as an expert panelist in federal consumer protection rule making, collaborated on state law changes governing debt consolidation, has worked as an expert witness in court matters related to the debt relief industry. He is available to speak with you about your financial struggle and helps people resolve their debt problems daily.
Ive just had a judgment placed against my LLC for $30K. They have frozen my acct. If I file bankruptcy for this LLC and begin another with a similar name ..but different EIN can they go after that one and do I have to notify my clients. Also are all banks notified or just my bank. Can I attempt to open another acct temp and await another lien until I contact a bankruptcy lawyer.
Talk with the attorney about your next steps for banking and/or operating structure.
What type of debt was this? What was the lawsuit about (generally)?
I will be personally bankrupt. I have a personal overdraft and unable to pay. However I have a small business account with the same bank with a couple of hundreds of pounds in it. Are the bank able to claim this??
My experiences and knowledge are limited to North America. A friend, and debt relief industry expert, has a site with a great UK resource available to you that can answer your questions: https://getoutofdebt.org/free-uk-debt-help-and-advice.
If I have a writ of garnishment against me and the writ lists my LLC as the judgment debtor and attempts to list a partial FEIN.
Can this writ attach to my personal or DBA bank accounts? The DBA account is listed under the same case number (with the last four digits of the DBA account number) and is listed in the Writ, but is clearly states it is attached to the LLC and the FEIN.
I would be worried about the DBA account, but less so of the personal account… that is, if I was not a defendant named in the lawsuit.
As with all stuff like this, it is best to speak with an experienced debt collection defense attorney in your state. If you need help locating one, post the name of a larger city nearby. I will send you different contact points for attorneys who tend to offer no cost initial consults.
Can an old personal credit card debt be legally levied from my Business checking its an LLC?
A lawyers office is trying to do the Levy?
Who is the plaintiff for the judgment the attorney is trying to collect on? When did the judgment occur? What bank is the LLC checking account at?
In 2001 my x-wife and I divorced and about 5 credit cards with substantial sums on them went unpaid, about $40,000 in debt. The collection letters and calls finally stopped about 2 years ago. Some of the creditor’s inquiries stopped long before that. I’m going to create a 2 person LLC for a new business soon. My question is: Will the creditors be able to find my new EIN for the LLC, connecting it to my SSN?
They may be able to locate the new business account, if they tried real hard. The 2 person nature of the LLC bank accounts may prevent them from being able to do anything even if they knew about the accounts. Talk this over with an experienced collection defense attorney to get a more detailed answer.
Were you even sued for the debts? If so, who were the plaintiffs in the suits?
My father personally guaranteed a credit card for a C corp in Florida. The card was opened in the company name, (his name on top) with the company FEIN. It was an invitation he received in the mail that he signed, returned and they sent him the card. When the economy tanked he couldn’t pay due to the lack of business and a back injury. He closed the company. THe credit card co. has brought a suit against him, a summary judgement is scheduled for 10/1. My question is now that he is retired, can they garnish his social security check and that of his wife, and also he receives a ckeck from VA. Also can they lien thier checking account where their checks are direct deposited and where they have their savings. They have a debit/credit card attached to the account. Their home is homesteaded and their vehicles are owned jointly.
I cover all of the Florida exemptions from judgment creditors over on this post: https://consumerrecoverynetwork.com/question/social-security-pension-state-exemption-debt-collector-garnishment/. If he is liable personally, which I would think he is given the circumstances you shared, he will have some concerns, but can navigate all of that.
Who is the creditor or debt buyer suing? Has he given any thought to fighting the suit?
Thank you for the prompt reply. The credit card is from Capital One and the buyer/collector is Erskine & Fleisher, Sunrise, Florida.
I don’t think my dad has ever thought of going to court, and right now he is waiting for a date from the VA for back surgery. There was a previous hearing that the attorney was supposed to conference my dad in. They never did and although his wife called to let the judge know and left a message, the next thing they received was a Final Disposition Form Pursuant to F.S. 25.075 which is a “no show”. I called the judge and explained and they rescheduled the hearing for 10/1.
I don’t think that at this time my dad would be able to undergo any further stress. He is also a heart patient and a diabetic, and needs to be in a good emotional state of mind. Thank you so much. You have given us some peace of mind in that if a judgement is brought against him, they cannot go against his social security or VA benefit.
Monica
Be sure to read that other article I linked to, and the comment section about laws protecting him in his state. This stuff does not go away, but you can navigate through it.
About 4 months ago, I formed an LLC in Arizona. I then opened a commercial bank account under the LLC’s name and its EIN. However, I am the sole signatory and the only member and manager of the LLC.
A credit card company is now suing me for an old personal debt. Is my LLC’s income or cash reserves at risk of being frozen/levied/taken after the court awards a judgment?
After initially funding the LLC with my own money, I have kept the income and balances separate between me and the business. I have one checking account (in my personal name) for my personal spending money; a separate account for the business. I draw a fixed salary from the LLC’s account once a month, starting 3 months ago. I’ve also been compliant with other legal paperwork filing requirements (such as publishing a notice of my LLC’s organization, as required by state law).
I’m a home-based business, so the LLC’s address is the same as my own. Don’t know if that makes a difference, but I thought I’d mention it. It’s a single member, manager-managed LLC in Arizona with its own EIN and separate bank account.
Is it at risk for my personal debt? Even if “legally” they can’t take its money, what do I do if they try to levy it anyway?
Thanks so much for your help and advice! I really appreciate it.
Additional note: The LLC’s name is completely unique from my own name.
It sounds like your social security number is not tied to the LLC’s bank account. And the account is not in your name. All of which would generally mean less risk to the account that result from personal issues.
I would run your scenario by an experienced debt defense attorney with a practice in Arizona. They will likely be immediately familiar with what exposure you have. And that confidence is worth paying for the consult, if you would even need to.
I for one would feel better if my personal account was not at the same bank as the account for LLC (even if I had nothing to worry about – as “stuff” happens).
Thanks for the quick response.
I’ve decided to speak with a bankruptcy lawyer to see if that’s the best option for my current financial situation. I’ll ask him about the LLC’s risk exposure as well. Forgive my ignorance, but when you say “debt defense attorney,” would that include a bankruptcy attorney — or is that something different? Should I consult with someone in addition to the bankruptcy lawyer on this issue?
Fortunately, as per your suggestion to have my person and business accounts at separate banks, I’m glad to say I do.
I was talking about a more specialized type of consumer law attorney, but the BK attorney you speak with should be able to readily answer your questions about bank account risks by judgment creditors.
A debt defense attorney will typically be more familiar with beating back collections in the courts. If you would like to see about locating one in your area, try https://www.consumeradvocates.org/find-an-attorney.
Hello Mike,
Albeit 6 years later, I’m curious to hear what transpired from your situation. I might be in a similar situation in the future so it’d be helpful to see how your case transpired (even though you’re in AZ).
Also, did you speak/handle your situation with a debt defense attorney as Michael suggested?
Thanks and hope everything turned-out favorably.
I am self employed and considered a contractor by Sears. I got ill and had to have two operatios.My health insurance paid 80persent of the bill. I could not work so I couldn’t make my portion of the bill. The hospital hired a cretior to collect. I tried to negotiate a small monthly payment, $200 a month. They wouldn’t take it so they went to court and got a levy on my business account which I still have time to fight. The letter from the court says garnishment all over. I live in oregon. I’ve read alot of articles that a creditor cannot garnish me becuase I am a contractor. My bank has both my s.s. card number and my EIM number. I talked to one lawyer and he said there was nothing I could do because they were levying my business acct. He did say to change banks and when I made payments to send money orders. So I am at a lost that oregon law says they can’t and yet they already filed in court. I have 10 day to come up with a plan. Any advise? In disbelief in oregon.
Consumer protection laws are designed to shield you from collections related to consumer debt. Business debts do not enjoy many of those same consumer protections.
I can email you contact info to two of the consumer attorneys I would call If I were you. You may hear the same thing, but I would be more confident in what was said if I were to hear it from one of them. Would you like the contact info?
Also,how much money are we talking about here?
$2500,
Yes send me the contact info.
Thanks
Reynaldo [edit: removed last name for commenter privacy]
I sent you an email with the contact info to the attorneys that can help.
I had a garnish check from one of my clients my janitorial business because I had a judgement against me because I forgot to pay my workers comp insurance, stupid I know. They are still paying the lady after 5 years and when the court appeals it i get notification in the mail which stress me out. I have a new business and a new ein number. Can workers comp garnish checks from my two small accounts even if my ein number has changed. Just trying to get back on my feet and I need this money to keep coming in. Do I have to worry.
Thanks for your help
Eric – A better resource to answer your question would be a local attorney with debt collection experience. Post the name of a nearby city and I can email you some contact details for attorneys with the experience you need.
Regarding personal judgements going after corporate banks accounts; I understand they cant. But I read they can seize your shares of the corporation, thereby seizing the business and all its assets. Is this correct Michael and if yes, how likely are they to do this? Is it a complicated procedure?
Robert – Talk about your concerns with a consumer lawyer whose practice focuses on debt defenses regarding consumer debts in your state. That will be the best source of information for your situation. If you post the name of a nearby larger city, I can email you contact information for that area.
I have some credit cards under my name that i stop paying about 1 year ago. I have a small corporation in the state of florida and the bank acct for the company was open with the company federal tax id#, the company it is not a DBA. I own the 100% of the bussiness. Can those credit cards freezze or get money from my company bank acct?? Thanks.
I do not see that happening. Talk this over with an experienced debt collection defense attorney in your state though.
I own a sole proprietorship business. Recently I received a garnishment order from the state of NJ to my bank for my business account. The garnishment is for a doctor bill from several years before I opened my business that my health insurance never payed, which was supposed to be covered. I tried on several attempts to rectify this but because I do not have this insurance anymore its like pulling teeth. Anyway how do I avoid this from happening again?? should I change my business to a llc?? any help would be appreciated. thanks
Nate – What is the name of the company trying to garnish? Is that different than the named plaintiff in the judgment against you in the court record?
As far as your business account goes, there are different benefits to different business structures like an LLC vs S corporation, etc. Some of those benefits are going to be state specific, so it is best to talk about that with a business structuring expert in New Jersey. That will not change the fact that there appears to be a judgment against you personally, and the extra ordinary collection efforts that can lead to.
What year is this debt from?
For a sole proprietorship business account opened with and EIN in NY, can a levy be placed upon an account used to make payroll payments from?
Lisa – What is the levy the result of?
HI,
Can creditors levied my business accounts for personal credit card debt? I have three “C” corporations.
Due to business failing, I have use up some personal credit cards and haven’t been able to paid.
Will they have rights to freeze my business INC checking accounts?
The other questions, is I also have a money value on my whole life insurance. Can they garnished my life insurance policy, and take the the money value from my policy/
All corporations are in the state of New York.
Johnny – Is there a collection judgment in the court against you for a personal credit card debt?
I do not see bank levies attempted on business bank accounts for personal debts. I also do not see attempts to collect on whole life plans. That said, you should run these questions by an experienced debt collection defense attorney in New York to get a better grip on your exposure.
What is your goal with the credit cards at issue?
can my payroll business acct. be garnished?
marylou – Are you asking about a payroll account being garnished as the result of a judgment entered in court? If yes, was the judgment for a personal debt or a business debt?
My question is, if I’m starting a business *Inc* with a partner is there risk of my judgement for a medical bill ($12k) claiming our startup cash in a joint business account?
Jason – I do not see bank levies against a business account for a personal debt. You really should talk with an attorney about this. Even if you pay a couple hundred for a legal opinion, it will be worth it when you are planning your business and your future success.
Yes! Your business AND personal checking account CAN be emptied! It just happened to me today! Down to ZERO. on BOTH personal & business checking account. Apparently they “levied” my account (S). I operate as a “sole proprietor” and am SICKENED that they can take my business funds that were personal credit cards , etc,. PRIOR to the business even existing. So your answer is YES. YES THEY’RE CAN.
Sole proprietor bank accounts and folks using a DBA type of set up are at risk from bank levies. There is no corporate structure like an LLC, C corporation, or S corporation to provide any insulation.
What if the business account is set up with an EIN?
Are you asking if your business account is set up with an Employer ID, and not your social security number, is money on deposit in that account at risk from personal debts where you have been sued and a judgment entered?
If so, the key here would be that your account was opened and maintained with the EIN and not your SSN.
This comment post was originally submitted as a reader question about if a business bank account can be garnished or levied for a personal debt that turned into a judgment. I am posting it and my reply to this page in an effort to better consolidate site content.
“Self employed with a judgement against me.
I was wondering if a garnishment can be taken from my business account or just my personal account. If so what can I do to stop this. The account is in a trust.”
I just do not see garnishments or levies against business bank accounts unless the judgment is against the business itself.
The best thing to do to alleviate this concern is to resolve the judgment. The judgment is not going anywhere and is likely growing with judgment interest. Are you in a position to settle the judgment for less than what is owed on it?
If you post more info about the judgment (who sued, for how much etc.), I could offer some additional feedback and realistic expectations.
Can a bank owed for a credit line from a business garnish your business bank account even if they are different banks in the state of florida
Brian – Was there a court judgment issued on the credit line?
Thanks for all the great answers you provide.
I didn’t see a definitive answer to the question of putting a lien on the corporate accounts of a C corp. I am in a similar situation and would love know what danger there is of them going after my corporation’s accounts and assets in the short, medium and long term.
Thanks.
Karsh – Generally speaking, a C corp would not be targeted for a bank account levy to enforce judgment collection on a personal credit card account. Collections after being sued on a personal credit card would be targeted to the person named in the suit. Unless the business was sued it would typically be protected were it an LLC, S-Corp, C-Corp etc.
In order to set yourself at ease with your concern you should speak with either an experienced debt collection defense or bankruptcy attorney in your state. Either type of attorney would likely have a ready answer and both generally offer a free initial consult. Speaking with an attorney does not mean you are hiring them.
the card compnay is barclay visa….again.one card just has my name on it…the second card has BUSINESS written across the end of the card..is a different color…and has the business name written under my name
The business is structured as an S Corp and the business checking accts are set up with an EIN from the business. The two cards have balances of about $35,000 each. I currently reside in CA….but was residing in GA when one of the cards was opened…if that makes a difference. The second card was opened in CA and DOES have the business name on the card underneath my name….but I dont think the business was used for credit purposes but instead was based on personal numbers.
We are just being called daily. We have not been sued. They are telling my wife they would settle for 25%…..but we dont have that even. Will they ever settle for 25% and then break that up over time?
If we do try to negotiate with them?? Should we negotiate with the card compnay or wait to see if they sell the debt and then negotiate with the collection company?
Would negotiating hurt us down the road if we are unable to settle it?
David – Thanks for the additional details. 25% settlement on a Barclay credit card is a great offer. Yes, it is possible to set the settlement up with term payments, but there are some “rules” to doing so. For example:
When settling directly with Barclay before the account charges off, Barclay is limited to payment terms of roughly 90 days when settling credit card debt. This time limitation is guidance (read: rule) set by the OCC, not a Barclay Bank preference. For some light reading on charge off see: https://consumerrecoverynetwork.com/charge-off-and-credit-card-debt-what-it-means-to-you/
Taking the information you have provided, and assuming I interpret it correctly, the 25% settlement done direct with Barclay would look something like:
– 35k balance owed
– settled for 25% for a total of 8750.00
– if able to get the settlement split up into 3 installment spread out over 3 months – You pay 2917.00 each month for 3 months.
If you are settling the debt direct with Barclay, but the account is already charged off, Barclay would not necessarily be hindered by the 90 day payment guidance. They may still only offer that length of installment though.
When settling the debt with an outside debt collection agency that Barclay may assign the debt to, you should have more flexibility with the payment terms of the settlement – as in a longer time to pay it. I do see settlement percentages get increased with collection agencies though, so you may end up paying more in a settlement than 25%, but the trade off is that you have more time to pay.
If you are settling the Barclay debt with a debt buyer who picks up the debt later, the percentages would likely be higher, but here again you would have more time to pay.
The risk with any of this is that the debt does not get assigned to a typical debt collection agency, or even sold off as part of a larger portfolio of unpaid debt to a debt buyer, but placed with an attorney debt collector who is also authorized to sue as part of their collection effort.
No matter what – you can only do what you can do. The above information is offered so that you can weigh your options and understand what can happen along the way. Ideally you would want to take the 25% offer now rather than wait. But it is totally understandable if you cannot.
Negotiating now is not harmful in the general sense, unless you were to say something like “I have a big job I am getting paid out on in March and can pay the 25% in full then”, or “I can pay the 25% in April with my tax refund”. In other words, offering up information and details that are not on point with an inability to pay now, or in the future, but I have X amount now, or can commit to having it over the course of the next 90 days.
If you do commit to any type of settlement that involves monthly installments – be certain you can make each payment on time. Missing one would negate the deal and any payments would then be applied to the full balance and you are left to negotiate anew, but with less cash resources.
Can you send me some names of bankruptcy attorneys in Florida?
Go to http://www.nacba.org and do a search using your city or zip code.