Can a creditor seize your bank account?

Discussion in 'Credit Talk' started by MJJ3767, Mar 29, 2008.

  1. MJJ3767

    MJJ3767 Active Member

    I've heard of people having their bank accounts completely wiped out by a creditor. I received a letter from an attorney 2 weeks ago regarding a repo'd car from 2 and a half years ago. I am going to send a DV letter this week. I feel in the end I am going to be sued over this. I fear making any deposits into my account because of this. Is a judgment needed in order for a creditor to get into your bank account or can they just come in and wipe your checking account?
     
  2. bizwiz41

    bizwiz41 Well-Known Member

    To sieze assets, a creditor must have obtained a legal judgement, and gone through the steps of execution of it. So, yes a creditor can "wipe out" your account, but you should have plenty of advanced warning with notices of suit, summons, etc.
     
  3. flacorps

    flacorps Well-Known Member

    Ummm ... not so fast.

    Texas and a couple of otherwise debtor-friendly states I don't recall right now have a weird (to all of us--to them it's commonplace) mechanism for pre-suit attachment of bank accounts. That's right--they grab your bank account just before they sue you, then it provides a fund for the settlement when they win.

    In actuality, this sort of thing is on the books in most states, but in states where creditors have decent post-judgment remedies (like wage garnishment) courts simply don't allow it unless the creditor can prove some hyper-compelling reason to do it.

    In Texas, the legislature provided that reason by closing most other avenues.

    Has the OP used that bank account in dealing with the creditor who may sue? Has the OP answered any surveys about his banking lately (rusing/pretext calls from the attorney's office posing as a survey taker)? Has the OP deposited any small checks from obscure sources (trojan checks)?

    A lot of this sort of investigation is done before the suit (or even the dunning), even in states where the pre-suit attachment isn't widely practiced.
     
  4. peeper

    peeper Well-Known Member

    Can a creditor seize a joint account if only one of the account owners has a suit against them?How does the creditor know which funds are the debtors?Plus what if a debtor has several saving and checking accounts opened jointly or seperately can one judgment order seize or freeze all of them?I have read where a debtor had a large negative balance put on their checking account because they had no funds in their checking account.I don't see how a bank would agree to that.What is the purpose of doing that?The debtor is not going to deposit any money into that account in the future and the bank can't sue the debtor to bring that negative balance current since the debtor never made any large withdrawal to cause such a negative balance to happen.I don't think the other joint account holder could be held liable.
     
  5. bizwiz41

    bizwiz41 Well-Known Member

    For some clarity, do these laws state "attachment", or (in layman's terms) allow garnishment? In other words, can the creditor "actually" take the funds, or are they "frozen" until a court ruling?

    Curious about this one...
     
  6. MJJ3767

    MJJ3767 Active Member

    To clarify this.......the attorney is representing the company that bought out my auto loan. I also have a credit card with this same company which has been in good standings and I've always made my payment on time. I use my bank account to pay that credit card on line so yes, they wouldn't have much trouble getting my bank info. I keep very little on this account as everything that goes in it, goes right out to pay rent, utilities etc. My balance is always very low. Since my BK 6 years ago, I have tried very hard to reestablish credit and kept up with all payments. They might have seen this on my credit report and assumed I was doing well financially. WRONG!
     
  7. flacorps

    flacorps Well-Known Member

    Prudence would dictate establishing a bank account somewhere else, if only for convenience's sake in case something happens to the first one.

    Try for a bank that only pulls softs for KYC purposes ... that way the inquiry won't show up on your credit report.
     
  8. bizwiz41

    bizwiz41 Well-Known Member

    This often happens; your credit is improving and they recognize that. This becomes a leverage point for them. The largest motivator CAs often have is the fear of impacting a consumer's credit report.
     
  9. jlynn

    jlynn Well-Known Member

    They can't grab it before suit is filed in TX, and they have to have one of 9 specific grounds:

    § 61.002. SPECIFIC GROUNDS. Attachment is available if:
    (1) the defendant is not a resident of this state or is a foreign corporation or is acting as such;
    (2) the defendant is about to move from this state permanently and has refused to pay or secure the debt due the plaintiff;
    (3) the defendant is in hiding so that ordinary process of law cannot be served on him;
    (4) the defendant has hidden or is about to hide his property for the purpose of defrauding his creditors;
    (5) the defendant is about to remove his property from this state without leaving an amount sufficient to pay his debts;
    (6) the defendant is about to remove all or part of his property from the county in which the suit is brought with the intent to defraud his creditors;
    (7) the defendant has disposed of or is about to dispose of all or part of his property with the intent to defraud his creditors;
    (8) the defendant is about to convert all or part of his property into money for the purpose of placing it beyond the reach of his creditors; or
    (9) the defendant owes the plaintiff for property obtained by the defendant under false pretenses.

    Further, plaintiff has to post bond payable to defendant, and in an amount as ordered by a judge...

    And I may be wrong, but I think it is Minnesota that Flacorpos is thinking of that has very debtor unfriendly pre attachment statutes on the books..
     
  10. flacorps

    flacorps Well-Known Member

    OK, so it's pre-service not pre-suit technically (still loosely referred to as pre-suit because it happens out of the blue before the debtor gets served).

    And I've heard plenty of texans complain about having their bank accounts seized first and getting sued the next day or so, which means to me that courts and lawyers play loose with it because there's not much else for the creditor to do.

    So the drill in TX would be to determine where the debtor banks and what the account number is, pretext call the bank to check the balance until a significant balance is found, then strike. Tax refund season being the most propitious time...

    I take it MN is bad about this too? Since MN's FICOs are the highest in the nation (versus TX having the lowest) I guess it doesn't happen as often up there and when it does happen they're too embarrassed to come on the boards and complain... Or maybe they're "sit there and take it" types versus maverick texans.

    Oh, and Texas has a criminal provision with respect to services not paid for. Someone got jailed not too long ago for not paying for a real estate appraisal, but it also could apply to electricity or your cable bill.
     
  11. bizwiz41

    bizwiz41 Well-Known Member

    jlynn,

    This list of requisites makes sense, and again the wording of them seems to support that the account is "frozen", or the account held up, not actually "withdrawing" of the funds (until dispositioned by a court ruling).

    Again, any debtor would have significant advance notice of these actions as well.
     
  12. jlynn

    jlynn Well-Known Member

    Yep, 31.04 of the Penal Code, but unlike theft by check - presumption, theft of services discusses intent.
     
  13. jlynn

    jlynn Well-Known Member

    Well no, not necessarily, I only listed the specific grounds of the statute for brevity. You would need to read all of Title 3. Writs can be requested at the initiation of a suit.
     
  14. bizwiz41

    bizwiz41 Well-Known Member

    Originally Posted by bizwiz41

    Again, any debtor would have significant advance notice of these actions as well.

    To clarify my meaning of "advance notice", I am referencing your above "Writs can be requested at the initiation of a suit". We all know there is a lot of "notice" before suit is intiated.
     
  15. jlynn

    jlynn Well-Known Member

    Ahh, point taken. :)
     
  16. CCN steve

    CCN steve Moderator

    [Off-topic drama removed. Anything related to consumer credit can be construed as "legal advice," all of which is appropriate for this board -- unless it's offered as "professional" advice or offered for a fee.]
     
  17. jlynn

    jlynn Well-Known Member

    To the OP - CCN Steve deleted my last post to you - to paraphrase, we didn't forget you, but without knowing your state it would be hard to get into a more detailed discussion as judgments are governed by state law, and we don't know what state you are in. ;)
     
  18. MJJ3767

    MJJ3767 Active Member

     
  19. flacorps

    flacorps Well-Known Member

    Then one suggestion might be to bank in any one of the other 49 states with a bank that has no branches (or even common corporate ownership with a bank that operates) in Arizona.

    It would also not be good to do any transfers straight from your existing bank account to the new one. Breadcrumbs tell tales.

    The new account is not something you would deny if you were asked under oath, even though you don't have very many leads that could be followed to find you out if you perjured yourself. However, it's quite likely that you could react more quickly (by closing the account and moving the money to still a third state) just after having made a disclosure than they could react to get the money with a UEFJA filing and attachment order in the second state. Also, to do that they would need to share the teat with yet another piglet attorney. It would not be all that attractive to them. Unless your name was OJ and they could be guaranteed some press for chasing the $$$.
     

Share This Page