CanI protect my money from creditorsby opening up an out-of-state bank account?

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CanI protect my money from creditorsby opening up an out-of-state bank account?

I was issued a citation to discover assets and my bank account was frozen (no money there). I have opened an out of state account. Can they get to that?

Asked on July 14, 2010 under Bankruptcy Law, Illinois

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Unfortuantely, yes: creditors can reach out-of-state bank accounts. In terms of discovery, an out-of-state bank may very well have to comply with an order from your state's courts or in a legal proceeding your state, if there is any nexus or relationship between the bank and your state (e.g. it also has branches in, does business in, or is cowned by a bank or company doing business in, your state). Second, if there are interrogotories or other discovery requests served on you to discover your assets, you have to answer them fully and truthfully, regardless of whether the money is. If you fail to do so and your failure is discovered, you could face additional liability.


Creditors can even garnish or otherwise reach assets in an out-of-state bank. To do so, they will need to go to the other state's courts, bringing with them a judgment in your favor from your state; the other state's courts will honor or enforce that judgment.

So moving assets to an out-of-state bank may make it a little more expensive or awkward for creditors to reach them, but does not necessarily provide any real protection.


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