Do Credit Card Companies Have a Right to Take Your Checks?

Credit card companies cannot arbitrarily take your paper paycheck but they can garnish your wages or bank account with a court order. Wage garnishment allows credit card companies to receive a percentage of your pay before the employer issues your paycheck. Bank garnishment freezes your checking account, allowing the credit card company to withdraw money for an unpaid credit card debt. Numerous steps are necessary by the card company before garnishment begins.

Lawsuits

The filing of a lawsuit is the first step leading to possible bank or wage garnishment. Credit card companies or debt collection agencies file lawsuits after failing to collect unpaid credit card debts. Lawsuits take place some time after the credit card account is about six months behind and charged off by the card company. A charge off is an internal accounting term and does not relieve the credit card account holder of responsibility for the debt.

Notice

The account holder learns about the lawsuit through a paper document called a summons and complaint. The summons is a few pages long and is the notification of a lawsuit. Attached to the summons is the actual lawsuit, called a complaint. The summons lists a date for appearing in court or a deadline for filing a written response to the lawsuit. Failing to respond results in an automatic victory for the card company called a default judgment. The default judgment is signed by the judge and orders the person sued to pay a specific amount of money to the card company.

Garnishment

Garnishment is possible if the person sued does not pay the default judgment or fails to work out a payment plan. The credit card company returns to court to explain the situation to the judge and formally request garnishment of wages or money in bank accounts. Judgments are also possible when the person responds to the lawsuit by showing up in court or responding in writing. Credit card companies are easily able to prove that the lawsuit is valid, leaving most people without a suitable defense. Financial problems stemming from unemployment, divorce or illness are not suitable defenses for a credit card lawsuit. The judge may acknowledge the problems but will rule for the credit card company if it proves the debt is valid and not paid as agreed.

Cooperation

Employers and banks are forced by law to cooperate with garnishment orders. Employers will start regular deductions from paychecks and continue until the debt is paid. Banks will give the credit card company complete access to deposit accounts bearing the name of the person sued. Garnishment of an account is possible even if the account has a co-owner and that person was not a part of the lawsuit. The owners of the bank account are not allowed to access garnished bank accounts except to make deposits. Access resumes after payment of the credit card debt.