Large amounts of debt cause excessive nervousness and anxiety and may make you feel like creditors are using unscrupulous collection methods, including that of unlawfully accessing your bank account. However a creditor cannot legally withdraw funds from your bank account to cover a debt, unless he wins a court judgment against you.
Personal Authorization
To withdraw any funds from your account a creditor must first receive your written permission to withdraw money from your account. However, if you signed an authorized withdrawal form for the creditor when you applied for the credit or at any time during your association with him, even if you don't remember, the creditor may withdraw the precise monthly payment agreed upon in the authorization form.
Judgment Authorization
A creditor can sue for reimbursement of a debt and if he wins a court judgment against you, he can solicit a garnishment of your bank account. This process may take several months during which time you receive notice of the judgment and of the garnishment by both the court and the creditor. If you do not respond to the lawsuit and the court order when the creditor wins the lawsuit, the creditor may garnish the bank account for the debt.
Account Freeze
Before a garnishment is enforced, notification is sent to your bank by the court. At that point the bank freezes your account for approximately 21 days. During this time you cant access, withdraw or deposit to the account, and the bank must notify you immediately of the freeze status. This notification must include the reasons for the freeze and include the court order number and court address. A form is enclosed with the notification allowing you to apply for a prompt hearing from the ruling court.
Exceptions
Certain funds or accounts are inaccessible by general creditors, even when these have a court judgment. State and Federal law prevents a creditor from seizing any amounts coming from Social Security benefits, Veteran's benefits, some pension benefits or funds from joint depositors (in some cases.) Other funds may also be exempt in the state you live in and you should consult a tax attorney to find out precisely which these are.
Creditor Exception
The only creditor that can withdraw directly from your bank account without first winning a lawsuit against you is the Internal Revenue Service. The IRS can garnish wages, bank account balances and even income that is protected from other creditors. This income includes Social Security payments, retirement benefits or unemployment income.
0 comments:
Post a Comment