It isn't possible for courts to file a judgment against your bank account, but a judgment can lead to another serious legal order called garnishment. Garnishment occurs after a judge hears testimony in a civil lawsuit. Civil lawsuits are possible for many reasons, including credit card debt. A defendant losing a debt lawsuit could face garnishment of his bank account.
Effects
A judgment requires a defendant in a lawsuit to pay a specific sum of money to the plaintiff, such as a credit card company. Garnishment is possible if the defendant does not pay. Federal and state laws force banks to comply with garnishment. Garnishment allows creditors and debt collectors to use electronic fund transfers to withdraw money from a debtor's bank account to satisfy a judgment.
Notice
Banks will not notify a debtor that garnishment is about to occur. The New York TImes reports many debtors find out about garnishment only after they discover the removal of money from their bank account, or that the account is overdrawn. During garnishment the bank or credit union shuts off access to the account for the account holder, except to deposit more money.
Default
Some people lose lawsuits and face garnishment without ever appearing in court. Defendants who fail to appear for a court hearing automatically lose the lawsuit, resulting in a so-called default judgment for the debt collector. The debt collector can then proceed with a request for garnishment if the debtor does not respond to the judgment. Some debt collectors file lawsuits knowing a certain percentage of debtors will simply fail to show up in court to defend themselves.
Process
Court officials notify defendants about court hearings by delivering a document called a summons and complaint. A summons is the notification of a lawsuit and the complaint is the actual lawsuit. Usually a courier hand-delivers the summons and complaint, although some states allow delivery by certified mail.
Solutions
The best way to avoid garnishment is to resolve debts before they result in a lawsuit. Debtors who receive a lawsuit should attempt to settle before the court date. SmartMoney.com reports that credit card companies and other debt collectors sometimes settle delinquent accounts for 20 to 75 percent of the balance. The debt collector may ask for the settlement in a lump sum or a few installments. Or the debt collector may agree to a long-term installment agreement if the debtor agrees to pay the full balance.
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