When a person runs up a credit card debt and then fails to pay this debt back on time, the credit card company can take many different steps to receive repayment. Usually, the company will begin by assessing punitive fees and upping the borrower's interest rate. However, this may only exacerbate the borrower's debt. As a last resort, the credit card company can seek to have the borrower's debt seized by force through legal action.
Lawsuit
A person who borrows money from a credit card company is legally obligated to pay this money back. If the person doesn't, he is in breach of the contract that he signed with the company, and the company has the right to sue him to receive payment. Only after filing a lawsuit against the debtor and having a judge affirm that the debtor is legally obligated to make good on what she borrowed can the company take steps to garnish assets or freeze bank accounts.
Garnishment
Before a credit card company can garnish a borrower's wages -- meaning take money directly out of the borrower's paycheck -- it must first get a judge to sign off on the garnishment. To do this, the company must file a motion of garnishment. The judge will then give the defendant a chance to respond to this motion. If the person is eligible to have his wages garnished, the judge will order the debtor's employer to set aside a part of his wages.
Bank Account Freezing
In lieu of garnishment -- some debtors do not have jobs -- a credit card company can attempt to seize money directly out of a person's bank account. While bank accounts are not garnished -- garnishment refers specifically to seizing a source of income -- they can be frozen, meaning that the debtor cannot access her own money. While the account is frozen, the credit card company may be allowed to remove the money owed to it.
Considerations
Whether a credit card company can garnish wages or freeze bank accounts is a different question than whether the company will choose to do that. Filing a lawsuit and filing motions for garnishment and asset seizure require the employment of a lawyer, which doesn't come cheap. The credit card company may not consider it a wise financial investment to spend this money unless the debt is exceedingly large, as collection is in no way guaranteed.
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