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Can my paypal account be levied or garnished for a unsecured debt judgment?

Richmond, TX |

I do not have bank account linked to the account and I never payed the debt collector with that account is there anyway that paypal account could be levied or garnished? This is for unsecured debt not government debt

Attorney Answers 3

Posted

No, your Pay Pal account is safe. I am not licensed to practice in Texas, so I don't know the exemptions or if your bank account (if you have one) is safe. What I advise my clients with judgments is to get an online bank account or out of state bank account or a pre-paid debit card so that it cannot be levied upon. Some suggestions - ING Direct, ally Bank, US Bank, ready debit or USAA if you are a member of the military (current or former) or a miliary dependent. Stay away from big banks with lots of branches and ATMS. And never bank with someone to whom you owe a debt (like if you have a Bank of America, Chase, Citi or Wells Fargo account and you owe a credit card or personal loan debt to Bank of America , Chase, Citi or Wells Fargo).

Anyway, PayPal is like a form on an online bank account so you can stash money there and it should be safe.

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5 comments

Rachel Lea Hunter

Rachel Lea Hunter

Posted

What Attorney Goldstein says is partly correct. A creditor can get a judgment (this is required in most cases before a creditor can levy on a bank account or other assets). You do not indicate whether judgment was entered or not. Each state has a procedure for entering a judgment entered by an other state. Once properly registered, the foreign judgment can then be enforced like any other in-state judgment. That all said, Attorney Goldstein does not address how likely it is to occur. Lawyers cost money. A judgment creditor would have to get a lawyer in whatever state you have assets and transfer the judgment. This costs money as well in addition to the lawyers. Is a creditor likely to do this? Unless you have a lot of money squirreled away, this may not be cost-effective. And you have to be given notice of the registration of the judgdment. By then, you could certainly take the money out of your account and stash it somewhere else. Finally, how is the creditor going to know that you have a PayPal account? I am aware that it is in the works to develop systems that will tell a creditor exactly where you have bank accounts. It may even extend to PayPal accounts. Again, even if a creditor knows where the account is at, if the account is physically located in state A and the judgment is in state B, then the creditor still has to go through the registry process. However, technology is not there yet and most creditors are not going to pay for it if it is still in the expensive stage if this is a consumer debt. To be totally safe, use a cash method and don't bank at all, put your funds in someone else's bank account if they will allow this and you trust them (like a close family member) or get a pre-paid debit card because there is no way that a creditor can track that at this time. However, you do need to think about how you are going to resolve the debt at some point.

Asker

Posted

Rachel That is not true. I just had my B of A account levied by the Employment Developement Dept ( CA ) for payroll taxes. The following day I received this via Email from PayPal. We're contacting you to let you know that we received a Levy notice from the Employment Development Department that affects your Account. A Levy is the legal seizure of property or personal Accounts to satisfy a debt. The Levy requires us to turn over any funds in your Account to the Employment Development Department. The Levy requires that this Account remain limited until released by the Employment Development Department. If you have questions, please contact bla bla bla !! Sincerely, PayPal

Rachel Lea Hunter

Rachel Lea Hunter

Posted

In my experience Pay Pal accounts were safe from most creditors. However, in your initial post you stated that this as an unsecured debt. I assumed it was a credit card or personal loan. Taxes are a completely different animal. Tax authorities have tools that ordinary creditors do not have. Tax authorities can lien accounts wherever they may be. I am not sure how they found the Pay Pal account but now they have it so you can kiss those funds goodbye.

Mitchell Paul Goldstein

Mitchell Paul Goldstein

Posted

False. PayPal accounts are not safe. In fact, I had AOL go after a client of mine and his PayPal account (can't reveal why). You confuse whether the account can be garnished with whether it is likely to happen. Do you really want to be the person responsible for the client taking the risk? All it takes is Debtor's Interrogatories to find the money and a quick order to freeze the assets. Also, taxing authorities, child support authorities, student loan and others can find the money if enough is at stake.

Mitchell Paul Goldstein

Mitchell Paul Goldstein

Posted

So, not partly correct, COMPLETELY CORRECT. It happens and I have seen it happen. Getting an order to freeze an account BEFORE the money is moved isn't that difficult if enough is at stake. Attorney Hunter should not give anyone a false sense of security.

Posted

I disagree completely. If you have money ANYWHERE, that place is holding the money for you. The account can be levied/garnished like anything else. Some times, the judgment has to be entered into the record (domesticated) in another state before this can happen, but IT CAN HAPPEN.

Before you believe what someone tells you about the law, ask for citations (if they exist).

Mr. Goldstein is a Virginia-licensed attorney only. The information is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation. Answering this question does not in any way constitute legal representation. Contacting Mitchell Goldstein or the Goldstein Law Group does not constitute legal representation, nor is any information you provide protected by attorney-client privilege until otherwise advised.

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4 comments

Asker

Posted

PayPal told me that my account cannot be levied, because it is NOT a bank account.

Warren Vincent Norred

Warren Vincent Norred

Posted

PayPal is wrong. And with respect to my friend from Virginia, I must state that he is speaking too generically. His statement that "The account can be levied/garnished like anything else," is technically true, but many accounts where you have money may be protected for one reason or another. Obvious examples are 401(k) accounts or accounts where you are holding money for employees in particular circumstances. You need an attorney if the money is large; you need to make a deal if it is small and go on your way. Running from creditors is not worth it.

Mitchell Paul Goldstein

Mitchell Paul Goldstein

Posted

Paypal does not hold 401K money and I have never heard of Social Security putting money into it. In fact, Social Security has debit cards for anyone without an account. So, I am speaking specifically, not generally.

Warren Vincent Norred

Warren Vincent Norred

Posted

We're talking past each other. I wasn't talking about PayPal holding SS money.

Posted

You ALMOST have enough information to help you here. Assuming that the Paypal money is just money you have received or put into the account from selling goods, and isn't arguably money owed to another, or held to pay someone else, or is about to go to a child support obligation, then it is reachable by creditors.

However, the creditor has to know about it, which is unlikely unless you have revealed that information to the creditor, and that creditor has received a judgment against you.

Best is to reach out to the creditor and make a deal. Otherwise, the creditor will sue you, and probably win, and then have a judgment against you for the amount of the debt, plus attorney fees. Then the creditor will ask for discovery, and in that questioning, will ask if you have a bank account. If he's experienced, he'll ask about Paypal, and then you'll either be forced to reveal the information to him, or risk being found in contempt of court.

I'm not your attorney; my answer to your question includes assumptions. If you want me to be your attorney, I'm easy to find.

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