Tuesday, March 1, 2011

Can a Credit Card Company Take the Funds Out of My Checking Account?

Bank garnishment allows credit card companies to take money from your checking account, but several things have to happen before this is possible. The credit card company has to sue you for nonpayment, win a court judgment, and convince the judge to sign a legal order allowing the garnishment. Then the credit card company has to locate your bank account, usually by examining the routing and account numbers from personal checks you used to make payments.

Preventing Garnishment

    Garnishment allowing access to your bank accounts cannot happen without court action. All delinquent debt is serious because of the damage it does to your credit score, but the problem really escalates with the filing of a lawsuit. Once filed, you must respond to the lawsuit or risk a judgment and garnishment.

Summons and Complaint

    Credit card lawsuits are usually hand-delivered to your home or place of employment by a courier, but some states permit notification by certified mail. The courier hands you the document and notifies the court that he has served you with the lawsuit. The document arrives in two parts stapled together. The first page is the summons, which is a notification of a lawsuit. The second document is the complaint, which is the actual lawsuit. It is vitally important to read the notice carefully for instructions on what to do next. In some states, you must attend a scheduled court hearing. In others, you will respond to the lawsuit in writing.

Common Mistake

    "The New York Times" reports that some people ignore credit card lawsuits, possibly because their credit problems have them too stressed out to respond. That is a mistake. Not answering the suit or showing up in court results in an automatic victory for the credit card company, called a default judgment. After the judgment, the credit card company can request garnishment of your bank account.


    Your chances of winning the lawsuit are not good if you owe the money and the credit card company can prove it. Illinois Legal Aid reports credit card companies routinely win in court. Seeking advice from an attorney and settling the debt out of court is the best way to end the threat of garnishment. Credit card companies will usually settle for about half of the balance. However, a card company that has sued you likely will ask that you pay more, perhaps 75 to 80 percent. Settlements payable in installments are possible. Be sure to get all the terms in writing.

Frozen Account

    The bank will freeze your account and deny you access if you fail to reach a settlement and the credit card company wins a garnishment order. During garnishment, you can only to make deposits. The bank will decline your debit card for insufficient funds and any checks you write will bounce. Meanwhile, the credit card company can freely withdraw money from your account in a lump sum or installments until you have paid off the judgment.


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