How to Keep Creditors Away From Bank Accounts

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A creditor cannot attempt to recover a debt you owe by withdrawing funds from your bank account without first receiving either your permission or a legal judgment against you. Withdrawing a debt from a consumer's bank account without first seeking permission is illegal. Unfortunately, this does not prevent the practice. Unscrupulous creditors have been known to occasionally withdraw debts from unsuspecting customers' bank accounts. Take steps to protect your account.

  • Pay your bills on time and as agreed. No creditor with whom your debt is current will even consider withdrawing funds from your bank account to cover the balance. Doing so would prevent the continuous accrual of interest that earns creditors their profits.

  • Pay your bills with a money order and never with a check or direct withdrawal. Paying creditors via check or allowing them to withdraw funds directly from your bank account provides them your banking information. Although most creditors are unlikely to withdraw funds without your permission, mistakes do happen and providing your bank account information makes these mistakes possible.

  • Respond to any court summons you receive over a debt. Ignoring a summons will automatically result in a default judgment being levied against you and funds may be withdrawn from any bank accounts your creditor currently has access to. By responding to the summons and showing up in court, you can force the creditor to prove the debt to the court. In many cases, this cannot be done. By showing up in court, you have the opportunity to protect your bank accounts. If you do nothing, your accounts may be in danger.

  • Close your bank accounts and open new ones elsewhere after a judgment. If the creditor already has your banking information, your money is not safe. If you move your accounts, money is much less likely to be withdrawn without your knowledge. Banks are very protective of customer privacy and will not give out banking information without a court-ordered writ of garnishment forcing them to do so (see Reference 1). While a judgment may allow creditors to recover funds from bank accounts they already have access to, many states do not issue writs of garnishment.

  • Open a joint bank account with someone you trust. If a writ of garnishment is served against a joint bank account, the other person whose name is on the account will receive notice before the garnishment is executed (see Reference 2). How much notice varies by state. This gives you advance warning of the impending garnishment you would not have if the account were in your name only. Use this time to move the funds in the account. Keep in mind that a writ of garnishment can only be served if your creditor is aware of where you bank.

Tips & Warnings

  • If the debt you owe is to a bank, moving your accounts may not be an option. A new bank is unlikely to allow you to open an account if you owe another bank money.

References

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