I am planning on using a online bank (ally or ingdirect) to move my money to protect myself from a potential bank levy or garnishment. I currently live in Arizona. How easy or difficult would it be for a debt collector to get their hands on that money? Neither bank has branches in Arizona.
Most of the national banks have a presence everywhere, even if there is no physical branch. (Somewhat similar with national employers too). So if you live in AZ and bank at Chase, and I have a judgment in MI, and I garnish Chase in MI, it is subject to the MI laws and will send me the money. (If you work at Wal-mart in AZ, and I garnish it in MI, the same could apply). On line banks present an interesting twist, but generally have to register with the states in which they provide services, so I would be inclined to say you might make it more difficult, but there would ultimately be a way to attach your funds.
The first question is whether there is already a judgment in place. If the Creditor has not yet filed suit and gotten a judgment, the creditor cannot garnish funds held by any non-related institution, and it cannot garnish wages.
but once the creditor has a judgment, it will be nominally more difficult for a creditor to garnish funds held in an out of state bank. It will depend on whether the state recognizes out of state judgments, as well as whether the bank knows that. The creditor may present a garnishment to an out of state bank, and the bank may freeze the funds to see if the creditor will also get an order to obtain the funds. If the state where the bank is will automatically give full faith and credit to out of state judgments, the creditor will simply get the order from the in state court. But if not, then the creditor will domesticate the judgment to the other state, and then get an order there.
It will mean additional trouble for the creditor, and additional costs to add to the judgment for you to pay, but it also may not mean that you have any greater ability to keep the funds protected.
Depending on how little is involved, and your ability to pay, as well as what other debts you may have, you may want to learn about the pros and cons of bankruptcy. A bankruptcy will be much better protection than trying to hide your assets from your creditors. And most bankruptcy attorneys offer initial consultations at no out of pocket cost.
William W. Fife IIIDebt Collection AttorneyGilbert, AZ ·
As an additional note to the other comment, if your account is in another state your AZ exemptions may not apply and subject you to additional risks. Also, while the bank may not have branches in AZ that doesn't mean they don't have a statutory agent here that would allow the bank to be served with a garnishment.
Depending on your overall financial situation you may want to consult with a bankruptcy attorney.
