• FreeAdvice has a new Terms of Service and Privacy Policy, effective May 25, 2018.
    By continuing to use this site, you are consenting to our Terms of Service and use of cookies.

Bank accounts

Accident - Bankruptcy - Criminal Law / DUI - Business - Consumer - Employment - Family - Immigration - Real Estate - Tax - Traffic - Wills   Please click a topic or scroll down for more.

azmuscleguy1234

New member
What is the name of your state? Arizona

My aunt has Alzheimer's and uncle has dementia. We talked to a bankruptcy attorney last year because their healthcare costs and daughter dying (she lived off the cards when she got cancer) caused them to be unable to pay on their cards anymore. They have 4 fresh bank accounts that were set up last year so that each type of retirement isn't commingled with each other. The only deposits to these bank accounts come from their retirement accounts which are SS for aunt, SS for uncle, military retirement uncle and State of Oregon PERS for uncle. They have two other bank accounts still open with minimal money in them. They've gone not paying their cards since March. Total debt 160k.

My question is that judgments are starting to come in from the various 15 credit card companies. We've not been served anything and actually have no access to the front door. What's the next stage for the creditors to get to their bank accounts? I'm pretty sure the BK lawyer said Social Security was safe if no more than two months of money was in their account. Same with the DFAS military. The big question is the bulk of money they get is from PERS and the lawyer said they can get a judgment on that. But how they get it and how much of the 5k per month can they take? They make about 90k a year in retirement and the cost for live in care exceeds that by about 10k per year which I make up. Losing the 5k per month will probably force them to have the uncle go into military care and not sure where the aunt will go.

They are never going to be personally served since they have no front door and never go outside but I'm guessing either myself or the caregiver could be served outside their house?

Any help greatly appreciated.

Stan
 


Taxing Matters

Overtaxed Member
They can sue to get a judgment on the debt. If they can't personally serve them then eventually they'll get service by other means, which may be by publication. If that happens they may never even know about the lawsuit until after the creditor has a default judgment against them for not showing up. The creditors can then attach any asset or income they have that is not exempt under federal and state law. Private creditors cannot reach Social Security income or most pension income (other than for support payments). If the credit card debt is $160k they might benefit from bankruptcy if they have any nonexempt assets.
 

azmuscleguy1234

New member
So I guess my follow up question: With SS income agreed is not touchable, is the military retirement or State of Oregon PERS able to be reached either in their bank accounts after deposited or before it gets deposited into their bank accounts by these creditors (credit card debt, SoFi personal loans and an auto lease they ended a year early) after they obtain default judgments against them? They have no other assets. Thanks
 

Taxing Matters

Overtaxed Member
The general rule is that once money hits the bank account it is treated as simply a cash asset; it loses its character as wages, pension, or whatever was the source of the money in the bank account. So a creditor can hit a bank account and take the cash even if the payment that created that deposit was exempt from attachment. But there are exceptions, with the most notable being Social Security. Social Security keeps its character as Social Security after deposit so long as the source of the funds can be traced as Social Security. This is one reason why you should have a separate account into which ONLY Social Security is deposited. If you commingle the Social Security with other funds you may lose the ability to trace it. You can always transfer the Social Security to another account later if you wish, but just realize doing that, too, may result in loss of protection once it is in that other account. I don't know off the top of my head, though, how the PERs and military retirement would be treated once deposited. They need to ask a lawyer in their current state about that.
 

azmuscleguy1234

New member
Thanks for the reply. So if the creditor gets a default judgment for 15k and the monthly 5k from his PERS income hits their PERS account on the 1st, that full amount if seized immediately until its paid off? I'm sure all of them will try and get judgments eventually but this is the first one that has documents sent to them. They won't be able to afford care for the wife if that's the case.

Does the bank send notice they are enforcing the creditors judgment before it happens or does it just happen?
 

Taxing Matters

Overtaxed Member
Thanks for the reply. So if the creditor gets a default judgment for 15k and the monthly 5k from his PERS income hits their PERS account on the 1st, that full amount if seized immediately until its paid off?
The way bank levies/garnishments generally work is that the levy/garnishment hits the account for the money that is in it on the day the levy/garnishment is received by the bank. If the creditor wants to get the money that is in there the next day, week, or month (or whatever) then the creditor has to send a new levy/garnishment order.

Does the bank send notice they are enforcing the creditors judgment before it happens or does it just happen?
In most cases the bank freezes the money in the account when the levy/garnishment is received and then the bank notifies the customer of the attachment. Whether there is any way for the customer to get the levy/garnishment cleared from the account before the bank sends the money to the creditor will depend on the applicable law that governs the particular levy/garnishment that is being done. For example, for IRS bank levies the law requires the bank hold the funds for 21 days before remitting them to the IRS. This gives the taxpayer a chance to resolve the problem with the IRS and perhaps get some or all of the money released before it gets sent to the IRS.
 

azmuscleguy1234

New member
Ok. Spent most of day researching this on the internet - it is very hard to follow for a novice. If someone can confirm my analysis that would be extremely helpful in guiding my uncle.

Looks like the DFAS is considered veterans benefits so, along with their social security benefits, those three are all untouchable (by his creditors bank levy that is coming soon) after they hit their separate bank accounts provided 1. those are the only deposits in each account and 2. the total of the accounts is under two months of deposits. Any amount over two months is open for seizure.

His Oregon PERS is safe from garnishment directly by ERISA rules, but once it hits his separate bank account it is immediately subject to the bank levy if the file it when it hits. So unless they offer his pension in a check format instead of direct deposit it will be taken until his judgment is fully completed - draining his account each month and likely subjecting him to all sorts of fees for zero balance and/or levy fees.
 
Ok. Spent most of day researching this on the internet - it is very hard to follow for a novice. If someone can confirm my analysis that would be extremely helpful in guiding my uncle.
If you are over your head as a novice, hire a professional. The internet is a wonderful resource, but is also full of misinformation and outright lies. By the time you have sorted the good from the bad it may be too late.
 

Find the Right Lawyer for Your Legal Issue!

Fast, Free, and Confidential
data-ad-format="auto">
Top