A bank can take money from your checking account to cover a defaulted credit card debt that you legally owe -- but only after being authorized by a judge. The bank must file a civil lawsuit against you, win a judgment in court and then ask the judge for permission to take money from your account.
Identification
The legal process used to take money from bank accounts is called garnishment. A devastating recession and U.S. housing bust starting around 2007 helped lead to an increase in garnishments, according to a 2010 story in The New York Times. The Times reported that garnishment was up 121 percent in the Phoenix area since 2005 and up 55 percent in the Atlanta area since 2004. Garnishments increased by 30 percent in Cleveland in just one year -- 2008 to 2009. No national figures were available, the Times reported.
Expert Insight
Some people learn that their checking account has been garnished only after having checks bounce or a debit card charge declined. According to the Times, some people never receive court papers notifying them of a lawsuit and fail to show up in court. That can lead to an easy default judgment for the bank, followed by a court order for garnishment. A notice of a lawsuit, called a summons, is usually hand-delivered to a person's home or business. However, the Times reports that some people employed to deliver summonses fail to deliver the documents and then doctor the paperwork to indicate that the person was served. The U.S. Department of the Treasury reports that notices of garnishment orders are usually mailed after a court decision is made.
Considerations
Banks are obligated by state laws to cooperate with garnishment orders, according to the U.S. Department of the Treasury. The garnishment can last until the debt is paid, but certain deposits in your bank account can be exempt from garnishment, including Social Security benefits.
Effects
Bank garnishment can be devastating financially, especially for people who are struggling to make ends meet. Many turn to bankruptcy, which stops garnishment while finances are reorganized through the bankruptcy court.
Warning
Avoid debt-related bank garnishment by paying your bills on time. If you do default on a credit card, contact the credit card company or debt collector to work out a payment plan or settlement. Debt settlement allows you to pay the balance for less than the full amount owed and can help avoid a lawsuit.
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