A collection agency is a business that assumes the responsibility of recovering past due debts for creditors, and typically receives a portion of the recovered funds as payment. A collection agency may use several strategies to recover funds, including sending letters to your home address or calling you at home or work. In some cases, a collection agency may also obtain access to your bank transactions.
Judgment
An owner of a debt cannot access your bank account information without your permission unless it has obtained a judgment against you. A judgment is a legal ruling that is typically made by the civil court in the county where you live. The debt owner must file a suit for judgment, and must usually give you time to respond before filing a motion for requesting final judgment from the court. The length of time for response varies according to state law, but is usually about 30 days.
Ownership of Debt
Consumers commonly believe that only the owner of a debt, which is typically the original creditor, can file a judgment suit against a debtor. However, a collection agency may sue you for the debt, according to the Federal Trade Commission. If a collection agency successfully obtains a judgment, it may have the right to review your bank statements.
Demand for Bank Information
In most states, if a collection agency has obtained a judgment against you, it may request a hearing called a debtor's examination. If the court grants the hearing, you must appear in court with information about your employer and your assets. You must also bring bank statements, which the collection agency can review. In some states, failing to appear for the hearing can result in fines or imprisonment.
Considerations
If a collection agency demands copies of your bank transactions during the course of collection activity, and has not obtained a judgment against you, you are not obligated to provide this information to the collection agency. Providing this information to a collection agency can increase the risk of illegal collection actions, such as making unauthorized withdrawals from your bank account.
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