A consumer who has purchased items with a credit card is obligated to make payments on time every month. If he falls behind or stops making payments, the credit card company will try to get the money owed. If the consumer ignores all attempts at contact, the credit card company has the right to file a lawsuit and request a court order, which can result in garnishment of the consumer's bank accounts. However, until you get a letter from the bank notifying you that your accounts are being garnisheed, the credit card company cannot freeze those funds.
Court Order Requirement
Credit card companies and collection agencies usually try to contact you and get payment for what you owe before they resort to garnisheeing money from your bank accounts. If you have ignored earlier contacts from credit card companies or collection agencies, they have the right to resort to a lawsuit against you.
During the lawsuit, the credit card company's lawyers present evidence showing how they contacted you and tried to get you to pay your overdue balance and how you ignored them. At this point, the credit card company believes it is out of options and has no choice but to garnishee your accounts. It cannot do so without winning the lawsuit and getting a court order from the judge to freeze your bank accounts and taking the money in them.
Payments Exempt From Garnishment
Your payments from the government, such as Supplemental Security Income, Social Security benefits, railroad retirement benefits and veterans' benefits, are exempt from garnishment by your credit card issuer. If you owe delinquent alimony, taxes or child support, these payments can be garnisheed.
Bank Notification
When your bank receives a legal court order allowing the credit card company to access your bank accounts, freeze them and remove any funds they contain, the bank will usually send a letter to you letting you know garnishment is imminent. Some banks do this as a part of their business practice with their customers; in other instances, the laws in some states require that they notify you of impending garnishment.
Preventing Garnishment
Once you receive written notification from the bank that your accounts are going to be garnisheed, you have one final opportunity to prevent this. You can stop it by contacting your credit card company and making arrangements to negotiate a payment arrangement or repayment plan. The letter you receive from the bank has a response deadline included.
If some of the money in your account has been deposited by a federal agency, you need to alert the bank about this before that deadline. If you do so, the bank should verify the origin of the money in your account. If it contains exempt funds, the bank has to notify the credit card company so the garnishment attempt can be halted.
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