Can a Debt Collector Go After My PayPal Account?

Published

April 18, 2023

Nick Jarman is the owner of RightAway, LLC, which provides coaching services focused on getting individuals from where they are to where they need to be. In addition to leadership development and coaching, Nick provides consulting services to the credit and collection industry with a focus on first and third party debt collectors, debt purchasers, and vendors. He has two decades of experience encompassing all facets of credit and collection operations including performance, compliance, business development, training, IT, analytics, and client experience. He served the last three years on the Board of Directors for ACA International and is the past President of the Missouri Collectors Association. He is adamant about leading by example and ensuring that every process is done the “right way.”

A reader recently wrote us to ask about judgments and what exactly a creditor can get access to when you owe them money.

Just got a judgment today on my credit report. I know they can seize your bank account potentially (of which I have basically nothing). Can they do anything with your PayPal account? Do they even know if a person has a PayPal account?

When it comes to what assets a creditor can seize in a judgment, it depends on the laws in the state in which the consumer resides. When creditors enforce judgments, the typical assets they look for are wages, property and bank accounts. Some states allow creditors access to them all, some states to one or the other, and there are some states that make enforcing a judgment nearly impossible by not allowing access to any.

With a PayPal account in particular, it (again) depends on the laws in the state where the consumer resides, but it also depends what type of PayPal account it is. PayPal does offer debit cards, which would transfer back to a checking account – an online checking account, specifically. So whether or not a creditor can access that account would most likely be left to the courts to decide, as online checking accounts could be considered different from traditional brick and mortar banks. A brief check through Google shows several purported legal opinions on the topic that go both ways, but I did come across several individuals who said they received notice from PayPal about their account being levied.

The bigger question here is would a creditor or debt collector know if a consumer has a PayPal account. The answer is they would not unless the consumer told them. That goes for pretty much all assets outside of employment and mortgaged property.

It’s important to check your credit reports regularly for changes, such as a judgment or other issues that you need to address. You’re entitled to your free credit reports every year from each of the major credit reporting agencies. You can also get a free credit report summary updated every 14 days on Credit.com.