If the credit card company wins the lawsuit, they will obtain a judgment against you. The judgment is very powerful because it allows the credit card company to take money from you without your permission. The court will give the credit card company a bank execution.
If the credit card company wins a judgment against you, it can take steps to get money directly from your bank accounts. In fact, a creditor could potentially take all that you owe from your bank account.
How a debt collector gets access to your bank account. Rest assured that a debt collector can't simply walk into your bank and take money from your account without authorization from you or a court decision. "In most states, creditors cannot freeze your bank account without a judgment," says Leslie H.
Creditors can't just attack your bank accounts because you were a little late or stopped paying your bills. To be able to levy or garnish your accounts, creditors and collection agencies have to go through legal channels.
Under federal law and regulation, financial institutions cannot do a setoff of money in your account to cover missed consumer credit card payments that you owe the institution (unless you previously authorized it to pay your credit card through automatic withdrawals from your account).
A judgment debtor can best protect a bank account by using a bank in a state that prohibits bank account garnishment. In that case, the debtor's money cannot be tied up by a garnishment writ while the debtor litigates exemptions.
To get into your bank account, the creditor must get a court order. Specifically, this means that the creditor must sue you (take you to court) and win. Only after the judge enters a judgment against you (meaning the creditor won the lawsuit against you) can the creditor have access to your bank account.
Unless you previously paid the creditor using only cash or money orders, the creditor probably already has a record of where you bank. A creditor can merely review your past checks or bank drafts to obtain the name of your bank and serve the garnishment order.
Debt collectors can ONLY withdraw funds from your bank account with YOUR permission. That permission often comes in the form of authorization for the creditor to complete automatic withdrawals from your bank account.
If you make any payments with your current debit card or other forms of electronic transactions, you grant the credit card company the authority to withdraw money from your account. Electronic thieves or unscrupulous creditors can use the information to withdraw more funds than they should.
If a debt collector has a court judgment, then it may be able to garnish your bank account or wages. Certain debts owed to the government may also result in garnishment, even without a judgment.
If you're in debt, you may be wondering if your creditors can simply “take” your money by freezing your bank accounts and either taking what you owe them or keeping your account frozen until you pay them. The simple answer is “yes” they can do that.
They Can Find Out How Much You Have in the Bank
A collector who has your bank account and social security numbers can probably easily find out the balance of the account.
The first step to stopping debt collectors from calling you is telling them the 11-word phrase - “Please cease and desist all calls and contact with me, immediately.”
If you ignore the collector they will make a negative report to the credit reporting agencies regarding your credit report. This will hurt your credit score. The longer you ignore the debt collector and don't pay the debt, the larger your debt will get.
Before you go to court, you'll need to prepare a full financial statement. This is so that your creditor can see whether you can afford to pay back the debt and how much. The financial statement shows in detail: how much money you have coming in.
Qualified retirement accounts
Retirement accounts set up under the Employee Retirement Income Security Act (ERISA) of 1974 are generally protected from seizure by creditors. ERISA covers most employer-sponsored retirement plans, including 401(k) plans, pension plans and some 403(b) plans.
Under the Fair Credit Reporting Act, debts can appear on your credit report generally for seven years and in a few cases, longer than that. Under state laws, if you are sued about a debt, and the debt is too old, you may have a defense to the lawsuit.
The relevant information to focus on here is that California is a community property state, which means that legally married couples jointly own everything – including debt. As a result, it is possible for a creditor to garnish a spouse's bank account if their spouse owes a debt.
Contact your bank immediately
If you claim the use of the card was not authorised by you, it is for your bank to prove otherwise. The bank may be able to cancel the payment or put the money back into your account. If your card provider will not give you your money back, report them to Trading Standards.
Cardless ATMs provide access to your account and allow you to withdraw cash without the need for a card. Instead, they rely on account verification via text message or a banking app on your smartphone. There are several ways that cardless ATMs can function.
Warning! Credit card companies can drag you to court for unpaid bills, loans as small as Rs 10,000. The central government is considering bringing individuals as well as partnership firms under the Insolvency and Bankruptcy Code (IBC).