Credit card companies and other debt collectors can place a lien on your property, such as a house. The lien forces you to satisfy the debt to the credit card company if you sell the property. The lien must be paid off as part of the real estate transaction. However, a lien does not allow the credit card company to take money from your bank account. Another legal process, called garnishment, allows for that.
Timeline
Generally, credit card companies close your account after you fall six months behind, according to MSN Money. The account is closed, listed on your credit report as charged off and sold or assigned to a debt collector. The debt collector may continue to contact you by mail or by phone for months or even years until the balance is paid. At some point, the debt collector may file a lawsuit demanding that you pay.
Summons and Complaint
The lawsuit usually is delivered by a courier to your home, place of business or anywhere the courier can find you. Some states allow for the lawsuit to be left at your house. A cover letter, called a summons, is attached. It is the notification of the lawsuit, followed by a longer document called the complaint. The complaint is the actual lawsuit and details the allegations against you.
Court Action
The lawsuit is eventually heard by a judge, and debt collectors usually win in court if they prove the debt is legally yours and you never paid it. The judge issues a legal order called a judgment, which orders you to pay the debt collector or card company a specific amount of money. If you refuse, the debt collector can take further action, including liens and garnishment.
Frozen Bank Accounts
Although both actions can be taken at once, debt collectors usually opt for bank or wage garnishment before filing a lien. A lien may never pay off for the debt collector if you do not sell the property, while garnishment can lead to money being sent immediately to the debt collector from your bank account and paychecks. Garnishment starts with the judge signing a court order forcing your bank and employer to comply with garnishment. Once the bank receives the notice, your accounts are frozen and the debt collector is allowed to withdraw money as it is available. In the meantime, you are not allowed to access the account except to deposit money. Your paycheck is affected, because your employer follows court orders by sending a percentage of your salary to the debt collector each payday.
Ending Garnishment
The best way to end garnishment is to negotiate a deal with the debt collector. You can offer to settle the agreement for the full amount owed payable in installments. You should insist that the debt collector end all garnishment activity as part of the deal. Get the agreement in writing and follow the terms to avoid garnishment being restarted.
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