Debt collectors may accept payments on a delinquent account with a credit card such as a MasterCard or a Visa. People who pay debts using a credit card sometimes do so to maintain the privacy of their regular banking information. That is a good strategy, but it may not prevent a debt collector from taking money from your checking or savings account.
Garnishment
Garnishment is a legal process allowing a creditor or debt collector to electronically withdraw money from a bank account for an unpaid debt. Paying a debt with a credit card does not prevent garnishment. A judge issues a garnishment order after awarding a creditor or debt collector a judgment in a debt lawsuit. The judgment requires the defendant to pay a specific amount of money to the debt collector. Garnishment is possible if the defendant does not pay the judgment. Garnishment allows a debt collector to freeze a debtor's account while making withdrawals in installments or a lump sum.
Process
It's up to the debt collector to locate the debtor's banking information, which is necessary for garnishment. Account numbers on a credit card do not correspond to a checking or savings account, preventing the debt collector from directly tracing banking information in that way. However the credit card can offer the debt collector help in locating the account.
Skip Tracing
Some people open credit card accounts and checking accounts at the same bank. A debt collector accepting a credit card for payment may ask whether the card is a MasterCard or Visa and the name of the bank. From that point a debt collector with garnishment orders can engage in what Bankrate calls "skip tracing." Bankrate reports that during skip tracing, debt collectors contact banks in a debtor's town and explain that they have a garnishment order for a specific person. The bank may confirm that the person is a customer, allowing the garnishment to begin.
Precautions
People seeking to safeguard their banking information should pay debt collectors with a prepaid debit card. Even a cashier's check can tip off debt collectors engaging in skip tracing. For example, a debtor may obtain a cashier's check from his own bank, making it easy for the debt collector to call the bank to ask whether the debtor is a customer. Money orders are another option for paying debt collectors while maintaining privacy.
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