If I was sued by a debt buyer who purchased old credit card debt, what can happen to my savings and checking accounts?

UPDATED: Nov 13, 2011

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If I was sued by a debt buyer who purchased old credit card debt, what can happen to my savings and checking accounts?

I am sole owner of both. Can I protect my accounts by adding a relative, my brother or sister to the accounts as joint owner? I am currently collecting unemployment and paychecks from occasional temporary work assignments?

Asked on November 13, 2011 under Bankruptcy Law, Texas


M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

If your creditor is successful in obtaining a judgement in court, then all of your "non-exempt" assets are at risk. In your situation, this appears to be your bank accounts. This is true whether the accounts are solely in your name or if they are joint accounts (your name plus someone's name). So any income you receive should not be put in your name.

That having been said, unemployment benefits are "non-exempt". This means that they cannot be seized by creditors. At least in theory. What could happen however, is that your bank account is "frozen" by a creditor and then you would have to demonstrate that the funds in the account were from unemployment. At that point the funds would be released. If, however, you don't do this within the specified time allowed, even though the funds are otherwise exempt, they can be released and paid over to your creditor. Again, the better course of action would not be to put those funds into a bank account with your name on it.

You should be aware, that if your creditor sues you in court, you must be notified of the proceedings beforehand. You could then close your accounts at that time. However, you should be further aware that certain unscrupulous collection agents fail to give the proper legally required notice and obtain a judgment without the debtor present in court. If that's the case, you can fight such a judgment. However, in the meantime your assets are at risk. So once again, keep them out of your name to play it safe.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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