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How to Prevent a Bank Account Lien

Updated on March 17, 2010

A bank account lien occurs when a creditor, often after a lawsuit, places a hold on the funds available to you in order to seize them. Although you may still make deposits to your checking account, you will no longer be able to withdraw funds until the bank account lien is satisfied. You can prevent a checking account lien, however, by taking precautions as soon as you know your account is in danger of being seized.

Make Sure the Garnishment is Legal

If a creditor places a lien against your bank account, it has to have a legal reason for doing so. With the exception of government entities, such as the IRS, all creditors must have a judgment against you before attempting to collect the debt via a bank account lien. Some collection agencies have been know to levy bank accounts without the benefit of a judgment. This is illegal, and you have the right to file a lawsuit against the collection agency should it happen to you. 

Pay the Debt

It seems simple, but many people do not realize that making arrangements with their creditor to pay the overdue debt will prevent a bank account lien before it ever occurs by preventing the lawsuit that sets the lien in motion. Even if the lawsuit has already occurred and your creditor has already secured a lawsuit against you, negotiating with the creditor to pay the debt is always a viable option - and the most successful - to help you avoid a checking account lien. 

Move Your Bank Accounts

A creditor must know where you bank before it can place a bank account lien on any of your accounts. Most creditors are well aware of where debtors bank since those debtors once had a financial relationship with the creditor that involved mailing a check every month or paying a debt via an automatic bank draft. If you are 100% positive that you always paid your accounts with a money order, moving your accounts isn’t necessary.

If, however, your creditor knows where you bank, you can move your checking account to another financial institution to prevent a bank account lien. If the creditor is diligent, however, it will find you eventually. You may consider moving your account to a small bank that only has once branch in an area at least 20 miles away from where you currently live to make detection less likely.

Keep in mind, however, that the IRS is a different beast. You cannot hide from the IRS, nor should you try. Doing so is illegal.

Withdraw Your Money

Your last ditch effort to prevent a bank account lien should be to withdraw the money from your bank account and pay in cash. Leave $5 or so in the account to keep it open. Should the creditor discover your account, you can bet that your $5 will be seized. This will serve as a red flag to you that the creditor is still looking to collect on the judgment.

After awhile, most judgment creditors give up on collecting a judgment if an individual is elusive, unemployed, or simply broke and move on to an easier target.

Disclaimer: I am not an attorney and this is not to be taken as legal advice. See a licensed attorney in your state for guidance specific to your situation.


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    • SteveoMc profile image


      8 years ago from Pacific NorthWest

      Again, it seem like good solid advice. Thanks for sharing on the subject. Edward, have you considered linking your articles together? This would make navigating to each of the related articles easy and increase your readership.


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