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.
I have a 30 year old debt approx 1100.00 that has morphed into a 12,800 dollar debt. I was served and went to court about 26 years ago when it was 3600.00. I told the judge that most of it was penalty and interest. The Judge dismissed it. Now 26 years later I received a court judgement against me for 12,800 and I was never served about a court date. Minnesota Any thoughts would be much appreciated
I would talk to an experienced debt collection consumer law attorney in your state.
Judgments can be renewed every 10 years in Minnesota, but you should have received notice of those proceedings, and it does not sound like you did.
There is also the point you made that the court dismissed this back then.
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.