Can a Debt Collector Get Into My Bank Account?

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Updated on Friday, January 29, 2016

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Can a creditor get into your bank account if you don’t pay your debts? The short answer is: maybe.

Whether and to what extent a creditor can get into your bank account depends on your specific circumstances.

It’s important to note that the exact answer for you will depend on the state law in which you live. For that reason, it may be valuable to seek an attorney’s advice in your state.

But for a lot of people, in many states, the following rules typically apply.

How A Creditor Gets Access to Your Bank Account

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.

This is an important point to remember. You don’t have to live in fear that a creditor could be in your bank account at any given time until the creditor gets a judgment in its favor. Part of this process requires that you would be given notice of the lawsuit and hearing dates and times. So, you should know when you’re being sued, and you shouldn’t have to worry about a creditor having access to your bank account until that time comes.

One caveat to this general rule is that there could be a situation where a creditor does not need to get a judgment against you in order to access your bank account. One example of this is the federal government. If you have federal loans, the federal government does not need to get a judgment against you to access your bank account as a creditor. The government could also use wage garnishment, tax refund interception and Social Security garnishment to get repaid. There may be other rare exceptions for you, which is why it’s important to seek an attorney’s advice.

Another exception to this rule is if the place where you owe money to is the same financial institution where you hold your money. For example, if you bank at Chase Bank and also have a loan from Chase Bank, the bank may be able to access your funds to repay this loan (this would be included in the paperwork you signed allowing this to take place).

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Giving a Creditor Your Bank Account Information

If a creditor has access to your bank account, you can be pretty confident that the creditor is going to collect what it’s owed. This means that you should never give a creditor your bank account information. Most debt collectors will ask you to pay this way, and you should not do it. Allowing the creditor to debit your account is essentially permission to continue to do it. Even if the creditor is only supposed to take less than the full amount you owe from the account, it could take more. And if the creditor takes more money from the account than you give it permission to, you are going to have to prove that. Getting your funds back and taking a creditor to court can be avoided if you do not give the creditor your account information.

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For example, if the creditor says that you can pay half of what you owe, and to do so, you need to give the creditor your bank account information, I urge you not to do this. In every situation that I have encountered, it is never a good idea to give the creditor your bank account information.

The general consensus is that you should not give your bank account information to a creditor. If the creditor insists that this is the only way for it to take payment from you, then you should open a second account specifically to pay this debt. Only fund the account with money that you want the creditor to have. This way, the creditor cannot access your full bank account.

How Much Money Can a Creditor Take From Your Account?

There are consumer protection laws in place to prevent a creditor from taking too much money out of your account. But again, these are state laws that vary depending on where you live.

Typically, the laws that limit a creditor’s ability to garnish your bank account require you as the debtor to do something. You are responsible for figuring out what the law is in your state and taking action to limit the amount that a creditor garnishes from your account.

A creditor can also garnish your wages, up to 25% of your paycheck. This is garnishment from your paycheck. If the funds are actually deposited into your bank account, the 25% doesn’t hold true.

If you are in this situation, you should consult an attorney to see what state laws are in place where you live.

How to Get Help

If you are concerned about a creditor seizing money from your bank account, a good place to start is to contact a local attorney to find out what state laws specifically apply to you.

Avoid giving a creditor your bank account information. In general, it’s not a good idea. And remember that typically, a creditor needs to get a judgment against you before it can access your bank account.

An excellent resource to help you with your creditor problems is the Consumer Financial Protection Bureau. This is a federal agency that aims to protect consumers, specifically with financial protection.

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