Creditors of all types, including credit card companies, have a variety of methods at their disposal to secure repayment of a debt. Typically, these methods can be employed only if the debtor is not paying back the loan on time and the debt has become delinquent. While a creditor will usually not resort to the most severe collection methods immediately, if the debt is large enough, he may employ serious legal measures, such as bank account seizure.
Credit Card Debt
Credit cards allow individuals to access a line of credit from a financial institution. When the person draws money against this credit line, she is obligated to pay it back according to terms agreed to when she first got the card. A typical agreement with a credit card company will outline penalties for late payment. Only when an account becomes severely delinquent will a credit card company initiate serious collection actions.
Civil Judgments
To initiate most collection actions against an individual, a credit card company will have to establish in court the fact that the borrower owes the company money. A failure to pay back a credit card company constitutes a breach of contract, and the credit card company has the right to seek damages for this breach. To seek these damages, the credit card company may file suit against the individual in civil court.
Motion to Freeze
If a judge finds that the credit card company is entitled to damages --- usually equivalent to the amount the debtor owes the company --- the debtor will usually be ordered to pay the debt. If the debtor refuses to pay, the company is allowed to file motions to get payment in several ways, such as freezing the person's bank account and taking out funds. If a judge orders a bank account to be frozen, the debtor's bank must comply with the court's order.
Exemptions to Freezing
Even if a bank account has been ordered frozen, the freeze may not be entirely legal. Under federal law, funds generated from a number of sources, including through federal benefits, cannot be frozen. In addition, both federal and state laws protect people with low incomes from having their accounts frozen. If a bank account has been wrongfully frozen, the debtor can petition a judge to have the freeze removed.
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