Friday, March 24, 2006

Can I Lose My Bank Account if I Have a Judgment?

Creditors and lenders are often serious about collecting unpaid debts. With this said, creditors and lenders may contact people with past due balances to get the account back on track. But when attempts prove unsuccessful, creditors and lenders can take legal action to acquire a judgment and possibly seize bank accounts.

What is a Judgment?

    Once a judge reaches a decision with regard to a credit lawsuit, he can issue a judgment, which basically awards the creditor the owed funds. Debtors receive a judgment notification on their credit report, and this information can damage their personal rating for a period of seven years. With a judgment on a credit file, getting loans, credit cards and low interest rates can prove challenging; and failing to satisfy a judgment creates further issues.

Considerations

    The sooner you pay a judgment order, the better. Upon receipt of your payment, creditors submit a form to the court as evidence that you satisfied the debt, and the court updates your credit file to read "paid judgment." According to Bankrate.com, debtors have approximately 30 days or one month to pay a judgment. Ignoring the judgment order has a snowball effect, where a creditor can return to court and take additional legal action to collect on a debt.

Bank Account Liens

    Bank liens or seizures can follow non-payment of a judgment order. The creditor returns to court, and if they have your bank account information on file, they can request a court-ordered lien against your account. Once your bank receives notification of the lien, the institution freezes all funds in the account. This prevents the withdrawal of funds or the writing of checks. Some funds exempted from a bank lien include government benefits, alimony/child support payments, worker's compensation, retired benefits and disability benefits.

Reversing a Bank Lien

    Stopping a bank lien or seizure is often a matter of paying the judgment order to the creditor or court or appealing the judgment and scheduling another hearing to dispute the order. Appealing a valid judgment only delays the process. Contact the creditor to make a full payment, or ask for an installment plan to pay off the judgment and regain access to your personal funds.

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