Can a collection company empty out a savings accounts?
Question Details:
I am in collections from a towing company for a car they impounded. Will that give them the right to empty out my savings account or put a freeze on my banking? Or is it only government owed money that allows them to do that?
If they have a judgment against you, they can go after money in your bank accounts. If they do not have a judgment, they have to obtain a judgment against you first.
A collection agency cannot seize a bank account without following due process of law. This means that they must file a lawsuit in the state in which you reside, win a judgment, obtain a writ of execution for the judgment, and then levy/seize an account. If the bank account has been frozen by order of the court, the debtor has a specified amount of time to file a claim for dismissal or exemption of funds. However, if the debtor did not respond to the summons or judgment notice, they lose by default.
However, if a collection agency has told you they can levy/seize your account without following the above procedures, they have violated the Fair Debt Collection Practices Act (FDCPA). They can then be held lible for fines, damages and other penalties.
Note: Exceptions to automatic levy/seizure of an account are federal or state owed taxes or a child and/or spousal support order issued by the court. Also, in some states, a "set off" clause pertaining to a contract made with the bank where the account is held.
