If you take out a loan using a credit card, you are legally obligated to pay it back within a specified time period. If you don't, the company has several options to force you to pay. Among these is account seizure, which can only be undertaken under certain circumstances and only with a judge's permission.
Credit Card Debts
When you draw money against a line of credit using a credit card, you are taking a loan from the financial institution that issued the card. Like any other loan, you must pay this money back at a designated interest rate and within a certain time period. If you default on a payment, fees may be assessed. After a certain period, the credit card company may demand immediate repayment.
Bank Account Seizure
One available option for a creditor seeking repayment of a debt is the forcible seizure of money from your bank account by filing a lawsuit. If successful, the creditor will be awarded damages, usually in the amount equivalent to the debt. At this point, the creditor may be allowed to file a motion to forcibly seize funds from your account.
Laws
Not all motions for bank account seizure are successful. Generally, a judge will give you the opportunity to explain why your account should not be seized. In addition, your state may have laws that hinder seizure, such as protections for low-income debtors. In addition, certain types of assets, such as federal benefits, cannot be seized.
Considerations
Banks are not permitted to freeze accounts, even if your checking account is with the same bank that issued your credit card. The bank must still receive a judicial order. However, the bank may take money from your account to pay off the debt if stipulated in the credit card contract.
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