Does a Debt Collector Have to Get a Court Order Before Taking Money From Your Bank Account?

When you miss a loan, credit card or other debt payment, the lender typically will call or send you letters to encourage you to bring your account current. If you do not make your delinquent payments, the lender may turn your account over to a collection agency. The collection agency may continue collection efforts, including a levy (or garnishment) of your bank account. However, collection agencies cannot take money from your checking or savings account without a court order.

Obtaining a Judgment

Obtaining a legal judgment is a collector's first step toward levying your bank account. A collection agency will typically only pursue a judgment if you ignore calls and letters or demonstrate unwillingness to repay your debt. In order to obtain a judgment, the collection agency files a suit against you in county or district court, gives you time to contest the lawsuit according to your state's laws and files a motion for judgment after your response time has passed. Unless you have raised a legitimate defense, the court will award a judgment to the collector.

Writ of Garnishment

In most states, after a collector obtains a valid judgment against you, it may petition the court that granted the judgment for a writ of garnishment. This permits the collection agency to order your bank to freeze your account and to forward all non-exempt funds in the account to the court. The court will then send the money to the collector for payment against your judgment amount. After your bank has frozen your account, you may deposit funds, but you cannot make withdrawals. Also, any outstanding checks or autodrafts will be returned unpaid.

Money Limitations

Some states place exemptions on funds in your bank account. For example, the first $400 in your account is exempt from garnishment in Ohio. Also, collection agents typically cannot garnish funds derived from certain sources, such as alimony, disability income, child support and Social Security payments.

Time Limitations

Time limits for a bank account levy vary by state. For example, a collector can only collect on a judgment for a private debt within seven years of the judgment date under Georgia law. This means the collector typically cannot continue to levy your bank account after the expiration of the time permitted by state law. However, most states allow collectors to renew judgments -- if a collector files a petition for renewal near the end of the valid judgment period, it may gain additional time to levy bank account funds.