Debt collectors can ONLY withdraw funds from your bank account with YOUR permission. This permission usually consists of an authorization for the creditor to make automatic withdrawals from your bank account. Creditors can't just take money from your bank account. However, a creditor could obtain a garnishment on your bank account by going to court and obtaining a judgment against you and then asking the court to seize your account for collection if you don't pay that judgment.
Yes, you can argue your case against the creditor. An attorney can help you respond to collection claims, document your situation, and provide legal advice. Yes, if a debt collector successfully sues you, you can get a writ of execution to seize your assets, including money in bank accounts. Yes, there are limits to how much money creditors can garnish from your salaries or bank accounts, and some types of funds, such as social security benefits, cannot be garnished.
If a debt collector has a court ruling, they may be able to garnish your bank account or salary. Certain debts to the government can also result in garnishment, even without a judgment. However, if certain federal benefits are directly deposited into your bank account, federal law automatically protects some of the funds in your account. A tax on a bank account allows a creditor to legally withdraw funds from your bank account.
When a bank receives notice of this legal action, it will freeze your account and send the appropriate funds to your creditor. In turn, your creditor uses the funds to pay the debt you have. The good news is that most debt collectors can't just contact their bank and take your money. In most cases, they must file a lawsuit and they have to win.
Once a debt collector wins your lawsuit, you become a judicial creditor. If your unpaid debts pile up, creditors can sue for a court order that allows them to recover the funds by seizing bank accounts (the legal right to seize assets to pay debts). Credit counselors are organizations that can advise you on how to manage your money and debts, can help you create a budget, and generally offer free educational materials and workshops. It's a good idea to seek legal advice if your salary is garnished or if funds are frozen or removed from your bank account.
Only debts, such as federal student loans and unpaid income taxes, can be garnished from your accounts or salaries without a court order. A bank rate is usually the result of a process that lasts months, so understanding the schedule can help you avoid the rate. The debt collection process can be time consuming and expensive, so lenders may prefer to work with you rather than garnishing your bank account. When you owe money to a debt collector, there's a chance they'll sue you and get a garnishment order that could affect your accounts.
Using debt settlement services is likely to adversely affect your creditworthiness, result in collections or be sued by creditors or collectors, and may increase the outstanding balances of your registered accounts due to the accumulation of fees and interest. In the meantime, you might consider deactivating any direct deposits to the charged bank account, since as soon as the funds enter the account, you may not have access to them. Even scarier is if you haven't recovered from a financial situation and a debt collector contacts you to demand payment. Under the Fair Debt Collection Practices Act (FDCPA), a federal law, the debt collector must provide you with a debt validation letter outlining the details of the debt when they contact you.
If you have specific funds in the account raised that are protected against a bank tax, such as Social Security benefits, disability income, or spousal support, you can file an exemption form for those funds to regain limited access to them. For that reason, you'll want to stop all automatic deposits into accounts subject to taxes or bank garnishments. And keep in mind that you don't authorize the withdrawal; the collector takes the court order to your bank or credit union and the law requires them to hand over the funds in their accounts. .
