Credit card debt collectors are allowed, by the Fair Debt Collections Practice Act, known as FDCPA, to use certain credit collecting techniques, within certain hours on certain days. They can call you, but not at work if you tell them not to. They can't threaten you with jail and they can't threaten to take any legal action that they are not authorized to take. A debt collector can freeze your bank account but he has to go to court first.
Garnishment
Garnishment, whether of wages or assets, is a court process. It requires first that a creditor get a judgment against you in your local court. The judgment defines the amount of money that the creditor is owed. Once the judgment is handed down the creditor can go back to court to get a garnishment. Typically, a creditor does an asset search to determine if you have any money or property that can be liquidated to satisfy the judgment. You may be served with court papers that require you to answer a series of questions regarding your assets, i.e., stocks, bonds, bank accounts, real property or cars. If you have a bank account, the bank may receive a garnishment notice, at which time it must freeze your account until further orders from the court.
Frozen Funds
Once a bank receives the garnishment notice, it must freeze funds in your account from withdrawal. If you have electronic bill payments coming through, they will not be honored nor will checks you have written. You will not be able to withdraw funds, though your funds can be deposited in your account. The bank can also charge you a fee for freezing the account. If you have any money being direct deposited into the account, you should stop the direct deposit to protect future funds from being frozen.
Exempt Funds
Certain funds are exempt from garnishment and if you have these funds in your account, you can direct the bank to unfreeze them, though you may have to go to court to do so. You must provide proof to the bank and the court, that the funds are exempt. Most federal benefits are exempt from garnishment and in some states, state benefits are exempt as well. If you receive a garnishment notice, pay close attention to any deadlines that appear, as these could impact your ability to stop or lift the garnishment in a timely manner.
Exempt Funds
Federal benefits that are exempt include Social Security pension and disability payments, Railroad Retirement, veterans benefits, military annuities and survivor's benefits, longshoreman and harbor workers death and disability benefits, military pay, all federal pensions, merchant seaman wages, student aid, FEMA disaster payments and U.S. contractor's injury, death or detention benefits. If you receive exempt funds, and also receive nonexempt funds, be sure you do not put them together in the same bank account. If you co-mingle these funds, their source is not clear-cut and you could lose the ability to lift or avoid the freeze. Some states require that a minimum amount of money in your account be exempted from a freeze so you aren't left with nothing. Check your state's laws regarding to see what the amount is, if any.
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