Can a Lien Be Placed on a Custodial Account?


Debt collectors can take numerous actions in order to recover a debt. One way includes placing a lien on a bank account. A creditor or debt collector can find bank account information by conducting a skip trace, which involves randomly calling banks in your vicinity. If you have a custodial account, you may wonder if a creditor or debt collector can attach a lien to this account.

What is a Custodial Account?

Custodial accounts refer to accounts that belong to minors, but are managed by an adult. Parents or other legal guardians typically manage custodial accounts for minors. Minors can only withdraw funds from this account with the consent from the adult. Custodial accounts vary, but oftentimes, these accounts are managed by adults until the account holder reaches the age 18 or 21.

Definition of a Lien

A bank lien is what can result when a creditor obtains a judgment for non-payment of debt. After a judge orders a judgment, debtors can pay off the debt to rectify the manner. But if a debtor doesn't respond to the order with a payment, creditors and debt collectors can locate the debtor's bank account and put a lien on this account. With a lien, creditors take possession of the account, and all funds within the account. This is a huge inconvenience for debtors because they can't withdraw their money or pay bills with money in the seized account.

Custodial Accounts and Liens

If a parent or guardian on a custodial account manages the account for a minor child, and then fails to pay his personal financial obligations, creditors cannot put a lien on the custodial account. While the adult manages the account and has access to funds, the adult doesn't own funds in the account. With this said, creditors cannot touch funds in this account, and if the adult files for bankruptcy, these funds are also safe from the proceedings.


Adults can manage custodial accounts up until the account holder is 21-years old. An account holder 18 and older can enter into a financial contract. For example, this individual can acquire a student loan, auto loan or credit card account. If the account holder of a custodial account defaults on his personal financial obligations, and his creditors sue and obtain a judgment order and lien, the account holder's creditors can attach the lien to the custodial account.

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