Can a Debt Collector Get Into My Bank Account?

Can debt collectors take money from your bank account to offset debts you owe them? Unfortunately, the answer is yes. But it takes a lot to get to that scenario, so if you’re not there yet you still have time to learn how to protect yourself from this type of collections activity.

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To start, here are our top tips for keeping debt collectors from your bank account:

How to Open a Bank Account That No Creditor Can Touch

In truth, it’s fairly rare to have a bank account that no creditor can touch. While laws in your state might help protect your accounts from private collectors, if you owe tax debt or other federal or state funds, your accounts might be up for grabs.

However, there are some types of accounts that are less susceptible to garnishment. Here are a few:

  • Trust accounts. These are accounts set up via a trust. That means the trust owns the account, not you. Depending on the legal situation, that could protect funds in the accounts from your creditors. It also, however, may limit your own access to the funds.  
  • Custodial accounts. Custodial accounts are accounts held for minors or other persons that can’t otherwise hold and manage their own account. If the money can be shown to belong to the other person and not you, creditors might not be able to garnish it.
  • Joint accounts. In some cases, a spouse might have some legal protection against creditors seeking to collect money owned by their partner. However, this can differ by state and situation. 
  • Accounts containing government benefits. Accounts that hold government benefit payments, such as those that come from Social Security, also have some special protections when it comes to collections. Some of the previous COVID-19 stimulus payments were also protected, but not all of them.

As you can see, there’s a lot of “ifs” and “maybes” here, and there’s a reason for that. This is a very complicated aspect of financial law, and if you’re looking to legally find a way to make your accounts creditor-proof, it may be a good idea to talk to an attorney.

In the meantime, here are some other things to do if you’re worried whether debt collectors can take money from your savings account or checking account.

Don’t Let Debts Get to the Garnishment Stage

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. Typically, the process looks a little like this:

  • You run up the debt.
  • You are billed for the debt and fall behind.
  • The original creditor takes some actions to collect, sending you bills and statements.
  • The creditor may turn your account over the collections, and a collections agency repeats the process.
  • Eventually, you may be sued.
  • A hearing is held, and the matter is decided for or against the creditor.
  • If the case is decided for the creditor, a judgment is granted against you.
  • The creditor can then file to garnish your wages or bank accounts or otherwise seek to convert your property into payment for the debt you owe.

Usually, it takes a decent amount of time for all this to take place. If you can get enough money together at any time prior to the garnishment to pay the collector or make an agreement for payment, you might avoid having your bank accounts garnished.  

Unfortunately, it’s possible to get surprised with old debt you didn’t even know about. Sign up for ExtraCredit to keep an eye on your credit reports and score so you can head off these issues before they start impacting your bank accounts!

Show Up in Court and Respond to Lawsuits

It’s also important not to ignore summons for lawsuits. Even if you can’t pay the money, show up. If you don’t show up, the creditor will likely be granted a judgment against you for the full amount you owe anyway—and you could face other legal issues. If the creditor doesn’t show up or can’t prove the debt, then the case might be dismissed.

You may or may not still owe the money—that depends on the specifics of your case. However, without a judgment, the creditor can’t seek to take money from your bank accounts.

Obviously, it’s ideal to consult an attorney if you can regarding any lawsuit you’re named in. But even if you can’t, don’t ignore the summons.

Keep Your Bank Accounts Confidential 

Did you ever wonder: How do debt collectors find your bank account to begin with? A common answer is that you gave them all the information they needed.

If you have ever set up electronic payments from your checking account or paid with a check, that company has your checking account information. They can use that to file for garnishment once they have a judgment.

It’s also a good idea not to share your account information with others or put joint account holders on your account unless you trust them implicitly. Someone else on your account could run up debt and put the funds at risk.

Keep in mind that it’s not always possible—or legal—to keep accounts 100% secret. Collectors can file discovery briefs with the court that require you to respond with information about your bank accounts and other finances, for example. But at least in this case, you simply didn’t hand over the information without making them work for it.

Ultimately, the best way to open a bank account that no creditor can touch is to take a proactive approach to all your money management. Check your credit regularly, pay your bills on time, and work with creditors when you fall behind to make payment arrangements and avoid a lawsuit. You can sign up for the free Credit Report Card for additional information on your credit so you’re never caught off guard by this type of collections activity. 

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