Can Debt Collectors Take Money from Your Bank Account

  • Can Debt Collectors Take Money from Your Bank Account
04 Apr, 2024
Daniel Cohen
3 min
689
money taken by debt collector from persons account

Learn what a debt collector CAN and CAN NOT do when it comes to taking money from your bank account.

Debt can feel overwhelming, especially if debt collectors are calling you. If the debt collectors meet certain requirements, they CAN take money directly from your bank account. We tell you what those requirements are and the steps debt collectors must take before they can take your money. And your rights through the whole process.

Quick Answers

Owing someone else money can be aggravating. There are times when it can feel overwhelming. When debt collectors threaten to take money from your bank account, being in debt can be downright terrifying. We understand. You’re trying, and you’re working hard, and you’re paying what you can under the circumstances, but circumstances are such that your creditor or creditors have engaged a collection agency to spur you to pay them. 

As consumer law attorneys, we represent people with all sorts and all amounts of financial liability. We understand the complexities, fears, and confusion associated with indebtedness and how debt collectors often resort to fear and harassment to secure repayment. We have heard everything. The answer to the question, “Can a debt collector take money from my bank account without authorization?” is, “It depends.” This article discusses the limitations and legal requirements for a debt collector to access your bank account.

You owe people money. You still have rights. You must know those rights. You must know who to contact to make sure people do not trample on those rights and how to get compensated for when they do. 

How Debt Collectors Gain Entry to Your Bank Account

Debt collectors must have permission to access your bank account. There are two primary ways they can obtain that permission. 

  • Your Authorization. First, you can give the debt collector authorization to go into your bank account and take money. We do not recommend that you give a debt collector access to your bank account. You should document every call and every contact a collector makes with you and, if you talk to them, the substance of what you discussed. 

There is a federal law that governs these practices called the Fair Debt Collection Practices Act ( the “FDCPA”). The FDCPA provides rules and regulations to which debt collectors must adhere when attempting to collect money. When you know those rules and regulations, you know what is acceptable and what crosses that line and becomes harassment. 

They can not threaten you or call you more than seven times in a seven-day period, or contact you at work, or talk with anyone else about your situation. And they definitely can not check your bank account or empty your bank account without your permission. You may have granted this permission by authorizing the creditor to make automatic withdrawals from your account. If you have authorized the debt collector to access your account - you can cancel that authorization. 

If a collector does access your bank account without your permission, contact a debt collection harassment attorney. An experienced consumer attorney - and one who practices throughout the United States - will be able to assess your situation, provide legal advice, and devise a strategy for going forward and if appropriate, file a lawsuit against the debt collector.

  • Garnishment. The other way a debt collector can lawfully access your bank account and take money is through a legal process called garnishment. Garnishment begins when a creditor sues you to recover what you owe. If the court rules in favor of the creditor, the court grants a judgment. A judgment is a judicial statement that says you owe the creditor a specific amount.

The creditor, which is now called a judgment creditor, can request a bank levy. A bank levy is the legal mechanism that authorizes the creditor to take money from your bank account. The bank, upon receiving the levy notice, is required by law to freeze the necessary amount in your account. 

So, can debt collectors take money from your bank account without permission? No. But a court can give them the permission they need. The FDCPA requires the creditor or their collectors to give you notice of the lawsuit, notice of the hearing dates and times, and allow you to defend yourself. This also allows you the opportunity to dispute the amount or negotiate a settlement.

Furthermore, there are some types of income that a debt collector can not garnish. These include Social Security benefits, disability benefits, and child support. However there are exceptions, like if the collectors are collecting for money related to back child support, alimony, taxes, and some student loans. 

In summary, debt collectors can access your bank account, but only after a legal process involving court judgments and bank levies, and not all funds may be accessible depending on their source. Even with permission, there are limits and rules regarding how much debt collectors can take from your bank account. Limits and rules vary from state to state. An experienced consumer attorney will be able to answer your questions on this and assess your case if you believe a collector has violated any law. 

Can a Debt Collector Take Money From Your Account Without Permission?

Debt collectors cannot simply withdraw funds from your bank account without authorization. However, they can legally access your account in certain circumstances. This typically occurs through a court process where the creditor sues you for what you owe and obtains a judgment. Once they have a judgment, they can request a bank levy, which gives them the right to withdraw funds from your account to satisfy the debt.

What is the Maximum Amount a Debt Collector Can Withdraw from Your Account?

The maximum amount a collector can withdraw from your bank account is determined by the court’s judgment and the laws of the state in which you live. Some states limit the amount a debt collector can take from your bank account based on a percentage of your balance. Some states have laws that protect a minimum balance in your bank account. You should contact an attorney to determine if your state has such limits and, if so, what those limits are. 

Federal Protections Against Debt Collection Actions

Just as the FDCPA offers consumers protection from aggressive debt collection practices, federal laws protect consumers to make sure that once garnished, debt collectors collect money from your bank account fairly. The general rule is that debt collectors may not garnish federal benefits payments. 

This Rule Typically Includes a Range of Federal Benefits, Such As:

  • Social Security benefits
  • Disability benefits
  • Veterans’ benefits
  • Federal retirement benefits
  • Federal student aid
  • Child support and alimony payments

Laws generally protect the above benefits from garnishment. But there are exceptions. Talk to a consumer protection attorney about those exceptions.

How to Create a Bank Account Shielded from Creditor Access

Can debt collectors take money from your bank account? Yes. With permission. Can debt collectors take money from my savings account? Yes. There is no distinction between savings and checking accounts. But there are ways you can set up a bank account immune from collection.

The best strategy to do this is to open a bank account specifically and solely for funds from exempt sources. This would mean that you have income from at least one of those federal benefits we mentioned earlier. You must also keep those funds separate from your other money. 

Certain states also limit the amount collectors can take from a joint bank account, even with permission and access. Much of this will depend on the state and the person with whom you own the joint account. 

How to Safeguard Your Bank Account from Creditors

There are other ways to protect your bank account from debt collection and garnishment. 

Avoiding Debts Escalating to Garnishment

The best way to defend yourself against garnishment is to be proactive and address your financial liability and the debt collector head-on. To do this, you must communicate with the creditors and debt collectors and negotiate a repayment plan or a settlement before they feel the need to sue you. It’s not easy, but keeping lines of communication open can often prevent matters from escalating.

Address Lawsuits and Attend Court Hearings

If a creditor sues you, you should respond to the lawsuit, attend all court hearings, and defend yourself. Ignoring a lawsuit will almost always result in a default judgment. And in the context of debt collection, that gives the debt collector authority to access your bank account. When you respond to the lawsuit, you have the opportunity to defend yourself and negotiate a settlement. We recommend contacting a consumer protection lawyer for advice and guidance.

Don't hesitate to Contact Us!

The attorneys at Consumer Attorneys are committed to helping people navigate the challenges of debt, debt collection, credit, creditors, credit reporting, and most citations where large companies treat people unfairly. This includes debt collection. If you’re facing aggressive debt collection practices or are concerned about debt collectors accessing your bank account, don't hesitate to reach out for professional legal assistance. Our team is experienced in consumer protection law and, more importantly, cares about people. 

To schedule a consultation about debt collection with an attorney at Consumer Attorneys: 

  • call us at +1 877-615-1725.
  • email us at info@consumerattorneys.com
  • submit a form for a free consultation or have a live chat. Because we know you work hard and are not always free from 9-5, we are available 24 hours a day, seven days a week. 

We will listen to you, assess your case, help you determine the best strategy, and, if necessary, file a lawsuit against the debt collectors to get you compensation for the damage they have caused. 

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About the author
Daniel Cohen
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Daniel Cohen is a Founding Partner of Consumer Attorneys and a co-chair of Consumer Finance Litigation practice. Since 2017, he is a member of the National Association of Consumer Advocates and the National Consumer Law Center. Mr. Cohen is a nationally-recognized practitioner of consumer protection law. He has a wealth of proven legal experience in the US in: collective claims, representing visually impaired people who believe their rights under the Americans with Disabilities Act have been violated in both the physical and digital environments, corporate governance and dispute resolution. Read more

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