A department of government, government agency, and court-ordered spousal or child support may seize your bank account to recover amounts owed. Other creditors must go through a civil suit and be awarded access to your bank account, otherwise your salary and assets are safe regardless of what the collection agency might say.
What Happens when the Bank Is the Creditor
If the financial institution where you bank also provides credit card or loans to you, your bank account may be frozen when outstanding payments become too severe. While frozen, you will not be able to access funds in the account, and the action forces you to contact your bank to resolve your debt.
How Garnishing a Bank Account Works
Depending on the judgment awarded, the creditor can seize up to the total amount they are owed. If you do not have that amount in your account then they can seize wherever is available. Furthermore, if your original judgment set out a voluntary payment schedule, missing a single payment makes the entire amount due immediately. These are grounds for bank account garnishment and the bank account will continue to accept all deposits while restricting withdrawals.
Garnishment of an account happens once per order, and it applies to all monies, regardless of the original source, and incoming amounts within seven days of when the affidavit was sworn. Luckily, joint accounts are protected from freezing.
Typically, the bank is served with the order first, followed by the debtor’s notification so the affected parties don’t have a chance to withdraw their money. If you have sufficient funds, you may be responsible for covering registrar fees related to filing garnishing orders, including:
- serving the order on the bank, which frequently requires a bailiff
- serving the order to the debtor
- the affidavit, which is sworn in support of the order
- serving Notice of Payment Out
An empty bank account cannot be used to reimburse the creditor’s filing costs.
Filing the Forms with Court
It is important for the creditor to confirm all details about the debtor since mistakes can make orders unenforceable, forcing the creditor to start over. Of all the information the creditor will need, the financial institution and addresses of branches where you bank is part of it. It is part of the bank’s responsibility to verify all the details on the garnishing order, and if the information is correct, they will remit the appropriate payments.