If you owe more than you are able to pay, you may find that your creditors will want to take money directly from your checking account. In some cases, that creditor might even be your bank, who has very easy access to your bank accounts. This article gives you advice on how to protect your checking account from creditors.

Change Banks

If your creditor is your bank, you should open a new checking account with a different bank. Otherwise, your present bank, and any collection agency they may use, will have access to your funds. Legally, if you use the bank for your income deposits and they are your creditor, the bank can use the money that you deposit with them as payment toward the debt you owe. This is called the "Right of Offset." Changing this situation becomes vital in order to avoid this outcome. By switching to another bank, your present bank can no longer gain access to your funds without first going through the courts.

Set Up a Seperate Checking Account

Even if your bank is not a creditor, you will still want to set up a separate checking account at another bank. Once you have a settlement with a creditor, in most cases the creditor will want to be able to automatically pull the payments from a checking account. So use that second checking account as the one from which the money is taken out. This way, your primary account information is not even shared with your creditors.

No Total Protection from Creditors

In the end, however, if the courts say that the money must be taken from your bank account(s) and given directly to the creditors, you must comply. Your bank will be notified and they will hand over the funds on a regular basis, according to the legal decision. There are funds that are exempt from collection, such as social security payments. However, even then you must be careful, because your bank might not differentiate between social security payments and other forms of income. If this is the case, you need to cash the checks yourself and avoid direct deposit with your bank. Bankrate.com also recommends using a legal service that will place your check with a bank that will not give up your social security money to creditors.

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Protect Your Checking Account When Attempting Debt Settlement

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