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
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.
I have two restaurant lease abandonments, I turned keys in without fulfilling my lease terms. Couldn’t afford it anymore. State of california… I had to personally guarantee the leases. One is actively pursuing damages and full lease terms of 1.7m. They have past due rent awarded at 49k. They r trying to serve me now for 1.7m lawsuit for remainder of lease. I have another established restaurant that is a dba under an ein. I was told the judgements won’t be able to leverage the dba account but only my personal accounts that match me personally.
To file bk reorg chapter is 50k. 2 of my Mentors said don’t do it. Just keep operating ur business and keep as little as possible in the bank in case it gets zapped. Also I’m concerned my large cc sales ach deposits into my bank accounts can be intercepted (?) If under my name (?) … I really don’t want to file bk but also concerned they are going to try and close my current restaurant business that has a decent revenue stream
During this time of uncertainty I would be looking at additional merchant account options too.
I would talk to an experienced debt defense attorney in your state to determine if your social security number is associated with the dba bank account, and if that puts the account at risk. If it is just an EIN, and no social security number associated with the account, I would feel better about it.
Dear Sir,
I have had the same “S” Corporation checking account in FL for 20 years with no other active accounts personal or otherwise. I am retired but keep the business checking account open by paying the state it’s Division of Corporations fee every year and for many years I have paid all of my bills whether personal or business from this checking account and I now have my monthly tax free retirement and tax free Veterans Benefits direct deposited into this account and I have not filed a tax return since retirement (7 years).I defaulted on personal credit card debt and have several “Final Judgements”against me and I sold my house which is in my personal name and I am about to close on my house and I will be depositing about $400,000 into this “S” Corporation checking account from my home sale. WHAT CAN THEY TAKE OR LEVY? I have always “assumed” this account was safe from personal debt collection since a couple of the judgements are 2 years old and my balance is always way above what the judgements are looking for and this account has never been levied.
Respectfully,
Vincent
I would talk to an experienced debt collection consumer law attorney in your state about this.
Generally, the bank account should match the name and social security number of judgment debtor. If this account is set up under a business name, and an EIN rather than a social, I am not sure how it would trigger a match.
Hello,
I live in Maryland and have 9 charge-offs; 8 personal unsecured credit cards, 1 auto loan and 1 student loan. They all were charged-off around the same time a year ago (end of 2019). No lawsuits that I know of…yet.
The credit cards debt ranges from $3,000 to $21,000 for each one. The student loan is around $36,000. The auto loan is around $11,000.
Total is approx $112,000.
With that said, I’m about to accept an offer for employment and wanted to start an LLC, as well (for the intended purpose of conducting business, but also as a way to potentially shelter myself if a personal lawsuits are served). Definitely not looking to be fraudulent, but I would be continuously funding the business by adding leftover disposable income from each paycheck (while keeping a small portion in personal accounts, at any given time).
Question is; Would this be an issue IF one or all of the collections agencies filed a lawsuit against me for my personal debts? Any added funds would be kept in the business and not used for personal usage.
And I would be setting-up an LLC with an EIN # in the state of Maryland. Also, regarding the LLC setup, it’s inevitably tied to your name somehow for tax purposes, no? Just trying to understand what you’re saying about the difference between using your SSN vs EIN and having your name attached to the business.
Hope that makes sense.
Thanks for your time. Appreciate the help you have provided others on this website.
Are those student loans federal?
Has the car been repossessed or turned in?
If you are sued by any of those creditors withing your state SOL, which is 3 years in Maryland, that could lead to wage garnishment and a property lien if you own a home.
You would not be collection proof by simply setting up an LLC.
When you set up the account was it with an EIN # or your social? MY SSN
How is the business structured, C or S corp, LLC, partnership, other? I’M NOT SURE IF I AM INC
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? NOTHING BAD YET, BUT I HAVE RECEIVED 70K IN MEDICAL BILLS AND I AM A 1099 EMPLOYEE AND MY CHECKING ACCOUNT IS FROM EARNINGS FROM BEING A 1099
What state do you live in?
I would be concerned about any bank account that my social security number was used to open it.
Can a newly funded DBA with it’s own EIN and non similar name be levyed by personal creditors with outstanding judgements in NY state ie credit card repossessed car etc
Judgment creditors are typically looking for a name and social match. It does not sound like that is the case here, but I will still be concerned, if it were me, if my name was on the account.
i had an old business which was a judgement was made to me personally. dated Oct 10th 2010, i just received a notice stating the judgement is to me personally. i have a new company S corporation. the letter from creditors attorney states they are going to garnish my new S corporation business and the S corporation business savings account. can they do that at this time the business accounts are not garnished. I think they have tried but failed?
Talk to an experienced debt collection consumer law attorney in your state about what is at risk, and how long judgments last in your state. Some can be renewed for ever, or you may be in the clear in another 10 years.
Credit card has ein only no SS and semi fictitious name. Busness has few assets.
Not much to worry about on the personal side if that is the case.
I’m an authorized signer on a bank account but my husband is the owner can they garnish that account for a default judgement on a credit card debt?
Your name and SSN being attached to the account puts it at risk. You can go in to the bank together and take you off the account.
Im a silent partners in an LLC (30% owner) My business partner/mechanic ran into some hard times and the bank account is -$2000 (around $1600 of that is from overdraft fees, he had auto payments set up and the companies tried to run them multiple times a week after insufficient funds)
I only helped start the business and funded it with $3,000 dollars, i do not think i want to add any more money to the business especially because i have gotten nothing back yet (we have been open for over a year)
If the LLC buisness bank account is charged off, can i be held liable for anything? (both our names are on the business and the buisness bank account)
Thank you very much for your time
With your name and SSN associated with the bank account you will typically be part of the collection process. Depending on the creditor and situation this can also lead to credit report damage.
Can a LLC. business account be levied for default federal student loans?
An LLC structured correctly would not be levied for a personal debt. Talk to an experienced debt collection defense attorney in your state for clarity.
I have an old account with USAA that was in 2004 and the Bank closed it for an overdraft of $198 in 2004. I wasn’t aware of this because I moved around a lot back then recently I opened another account with USAA made a deposit a small one they immediately cease the deposit and applied it to the old account and told me I could make deposits but could not withdraw any money until the 198th is paid off on the event bank account they had written off as a bad debt. Is this legal?
It likely is, but contact an attorney in your state and ask about this.
One of my business bank accounts was overdrawn and in the negative. The bank closed the account and charged it off to a debt collector. I have another business bank account with the same business name and EIN. Can they end up getting funds form that other account?
Is the other business account with the same bank? If so, what bank are your accounts with?
No, it’s a different bank. I just know that for personal accounts, if there’s a judgment against you, they can find your bank account and take your funds. But they can’t take it from a business account. However, if they say the BUSINESS owes, can they find the other business bank account and take it from there? They would obviously have to sue the company first and win, and then get a ruling/judgement in their favor, and then do it. But can they even do that? Thanks.
There are some instances where a business account can be placed at risk when there is a judgment against the business itself.
What type of business structure is it (S or C corp LLC, DBA)?
I did miss your reply until you brought my attention to it.
Thanks. It’s a single member domestic LLC. Not DBA. And yes, that’s my questions, if it comes to the point where there’s a judgement against it, can they find another bank account and garnish the funds?
It is possible. Canvassing banks is rather simple, and done all the time. Locating the bank is one thing, getting the bank to forward the funds another. I would run your situation by an experienced collections defense attorney in your state. I can email you list of them if you like?
The type of attorney I will email you has a practice that focuses on consumer collections through the courts, but they should be readily able to answer about bank levies that can hit a single member LLC. More often I see this type of situation prompt asset seizure and not operating accounts.
Ok thanks. It’s only $75 so I doubt they will go to too much trouble. Also, there are no assets except some money in that other bank account. Yes you can email me attorneys. Thanks
State?
Did you get my reply? Just curious because you were so fast with the other one, and now it’s been 3 weeks.
I have a summary for jugdement on a llc that i closed down, i current have a new llc and a new tax id, can they garnish the new business for what i owed on the old one?
I typically do not see that happen, but what was the judgment debt about?
I have a judgment against me from a student loan. I am not making payments on it because I cannot afford to make the payments, I’ve tried at tax time to do a lump sum now and then next year but they won’t work with me that way they want it all in one sum. I have the opportunity to have a financial backer to open a business in my name but the financial part is not. Would my llc account be open to having a freeze on the account or would they be able to take the property that’s in the business for payment?
I do not typically see businesses set up as an LLC harmed for the personal debts of a member of the LLC. Talk with an experienced business law attorney about how you set up your entity and make sure you are doing it right. I know many accountants that are knowledgeable in this regard too, so check with that type of resource if you have one already.
I have an S corp in NY and with the current state of the economy we have had the worst year. My business partner had personaly signed for all our credit lines and he has filed for chapter 7. We opened up a new S corporation with a new name. My question is can our new bank account for the new S corp be in jeapordy from debt collectors from the old S corp?
I find that unlikely. You may want to run your scenario by an experienced debt collection defense attorney in New York too.
Our business has been sued and a bank levy has been issued, the business has a number of DBA accounts associated with it. We had filed a “Withdrawal of DBA” and opened a new DBA by the same name under a different EIN. Would this free that specific DBA account from being affected by the bank levy? Does the DBA still carry the same liability or does that end with the date of withdrawal? Thanks for any assistance.
What type of issue was the foundation of the judgment? Was it unpaid business lines of credit?
The name and EIN will certainly be the easiest thing to match for the judgment creditor, but it does not have to end there.
How much is the judgment for?
I live in the state of Arkansas I have a personal judgment against me. I have a business acct filed with an ein tax number. . Is this business acct at risk for levy for my personal debt. Also this business acct holds vendor moneys in escrow for a month at a time. So technically the money in this acct isn’t mine. Can this acct be seized due to the nature of the acct and using an ein rather than social? Will I be given any notice if it were to be levied or any chance to dispute this prior to any possible seizure?
I forgot to mention my business is a llc with sole ownership.
Generally speaking, you will be able to formally contest any “taking” or levy against the account.
I do not see personal collection judgments reach to completely separate business accounts. You will want to connect with an experienced debt defense attorney for their feedback about your situation.
How much is the judgment for? What are your goals for dealing with it?
Hi Michael,
I have a subchapter S corp in Oregon and am dealing with a collections company for a hospital bill I was unable to make payments on, they would take no less than $400 a month and I couldn’t afford that.
I am speaking with the collections company, they already filed a small claims against me, it is $8,900. I just emailed them my last 90 days of personal bank statements, which don’t show much income at all. Can they request to see my business account? And can they go after that? Or my corporation? I don’t make much at all right now, I am an artist and any money at all I do make goes straight to bills. I’m stuck right now, specially after being so sick.
Thank you for your input 🙂
Heather
Your business account is not typically at risk in this scenario, but you should respond to anything that that is required by the court (such as during as asset hearing). Talk over what you must provide and what you can protect with an experienced debt collection defense attorney. I can email you a couple of really good attorneys in the Portland area if you like?
Was any of the bill covered by insurance?
Thank you Michael! I would appreciate that 🙂
Yes, I had to fight with the insurance agency to even cover the surgery. They didn’t want to at first, I got a hospital bill for $13,000. But I was able to prove my gallbladder was gangrenous and it wasn’t just an elective surgery like they tried to file it as. I was only supposed to owe $6,000 (deductible) but the insurance wouldn’t cover the anesthesiologist, they said he was from out of my network. I will never understand insurance 🙂 So as of now the bill is $8,900.
I sent you an email with contact info to the two attorneys. Let me know how that progresses.
Hi Michael,
I have a charged-off debt from B of A. So far nothing has happened other than it appearing on my credit report. If they do get a judgment can that money be taken from my business account also? The business is a sole proprietorship.
I live in Nevada.
Many business owners set up a sole Proprietorship and still have an EIN associated with operations bank accounts etc. Is your bank account for the business associated with your social security number?
What is your goal to deal with the BofA account? You can settle for reasonable amounts with Bank of America at virtually every stage of debt collection.
My husband was in business with a friend a few years back. The friend up and closed the business with out the my husbands knowledge. The friend took some lifts (mechanic shop) out of the building they were in and wasn’t suppose to. Well the friend declared Bankruptcy on everything under his personal name not the business. Yes he put those lifts in there as well. Well my hubby got sued for them for 28,000. and the friend got nothing because of the bankruptcy. The friend still has the lifts in his new shop! The lawyer for the lift company just seized my husband and his business partners company bank account and our personal account. There is a judgement on my husband and its on his credit. So is this legal? We live in Florida
I would encourage you to talk about all of this with an experienced debt collection defense attorney. There may something you can do to unwind what happened in court without your husbands knowledge.
Where in Florida are you? I can send you some contact info to some attorneys I know of with the experience you need.
I have old personal credit card judgments and I now what to open an LLC for my new business in NJ. Can they come after my LLC?
I do not see instances where an LLC is aggressively sought for payment on a credit card judgment against you personally. Who is the judgment creditor? What is the approximate amount of the judgment, and how old is it?
One of them is Midland Funding in 2009 and the other one was in 2011 by Vanz LLC (not sure who they are).
One of them is 3900 and the other is 4700
Vanz LLC is a debt buyer.
I do not see you having trouble with either as it relates to your accounts opened with the EIN for your LLC.
Just know that those judgments aren’t going anywhere soon, are probably growing from interest, and can often be negotiated for reduced payoffs.
I have a judgement placed on me from a past experience. If i partner in with a C corporation becoming a shareholder and owner can the person who has the judgement on me take action on the c corportation?
I generally do not see that happen. What is the judgment from (type of debt), and for how much?
I recently incurred a large negative securities unsecured balance due to a trade. They will not have a judgment for three months. I am a sole proprietor. I am thinking of forming a LLC not to protect my money which I am willing to pay as garnish in NY but to protect my business banking so I can function and pay employees in case they freeze my account. Is it to late to do this since they have no judgment? Should I open the new business account in a different bank than my personal account?
The first thing that jumps to mind is whether or not any moves you make now, could later be construed to have been for the purpose of evading creditors. If you are in the midst of a legal proceeding, attorneys will sometimes advise against property transfers and the like. If it were me, I would run your business restructure plans by an attorney. You will want to be certain that your plans accomplish everything you want them to.
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??