It’s a dreadful feeling when a company or organization can tap into your bank account. What once was a very personal thing, can now be reached into like a cookie jar. A credit card company that has a contract with you as a debtor has the means to levy your bank account, even if the debt was charged off long ago, but they must go through a specific legal process in order to do so. Odds are, that by the time they do, there were most likely some warning signs.
How Bank Account Levies Work
When you default or don’t pay back your credit card issuer for a credit card debt, they will most likely close your line of credit, but still attempt to collect the debt themselves. If collection attempts go unanswered, they will often sell the debt to a collection agency for pennies on the dollar. After the debt is sold the new company has a legal entitlement to the debt and will resume collection activities. If there is still no resolution to the debt, the new collection agency will then go to a judge with a lawsuit asking for a judgment. You’ll be given notice (typically by a process server) with a notice to appear in court. If you don’t show up to court on the assigned date, the creditor will most likely receive a “default judgment” giving them a legal claim to the money owed. Additionally, the creditor will then have the ability to obtain permission from the Judge to levy your bank account, garnish your wages, or even place a lien on proper that you own.
Defending Bank Account Levies
When it comes to bank account levies, the best defense is usually a good offense, and you will most likely have ample opportunities to prevent a credit card company from levying your bankruptcy account if you are proactive. The first opportunity to prevent a bank account levy is when you start to fall behind on your payments. Credit card companies will usually work with you to create a payment plan to catch up on missed or late payments. If your debt has already been sold to another entity, they will reach out to you and will often agree to settle for less than what you owe if you can pay a large portion of the debt at once. If you have already been sued for the debt and the creditor received a default judgment, it’s not too late to reach out to the company and negotiate your debt and/or get placed on a payment plan. If your bank account has already been levied, you can contest the lawsuit or simply stop using that bank account. A creditor with court permission will be able to continually drain your account or garnish your wages until they are paid back in full.
Bankruptcy Stops Bank Levies
As a last resort, filing for bankruptcy protection will grant you an automatic stay in which all wage garnishments and bank levies will be legally halted or “stayed”. During the bankruptcy process, you may be able to exempt the funds already levied, in which case, the collection agency or credit card company will be legally forced to return the money they have already collected. Additionally, by filing Chapter 7 or Chapter 13 bankruptcy, you can typically wipe out unsecured credit card debt. By obtaining a debt discharge in bankruptcy, Judges will usually drop any lawsuits involving unsecured debt originating from credit card debt. Contact a bankruptcy attorney in Dayton OH where you live if you want to put an immediate stop to a company levying your bank account.